Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

answer me Ananth started up a business, and pays 80,000 into her business bank account on 1 st July and budgets as follows: - Fittings

image text in transcribed

answer me

Ananth started up a business, and pays 80,000 into her business bank account on 1 st July and budgets as follows: - Fittings to be purchased on 1st July for 90,000, and this will have to be paid for by the end of the month. Depreciation is 10,000 a year. - Wages: 10,000 per month. - Rent of warehouse will be 84,000 per annum, payable in monthly instalments at the start of each month. - Other costs incurred in the running of the business (excluding purchases) will be 40,000 per month, payable in the month in which the costs are incurred. - Purchases will be supplied on one month's credit (i.e. purchases in July will have to be paid for by the end of August). - Half of the sales are expected to be for cash; the remaining half on credit. Naaz is budgeting to allow two months' credit by her credit customers (i.e. credit sales in July will not be settled until September). - For the purposes of the Profit \& Loss and Balance Sheet closing stock is valued at 90,000. There is no opening inventory (stock) figure for the 'Cost of Sales' calculation. - Ananth had drawn 500 a month. - After careful market research, Ananth expects a steady but rapid expansion in her business. Her forecast for sales and purchases is as follows: Required: a. Prepare a monthly Cash Flow Statement for Ananth for six months forecast from July to December. b. Prepare a budgeted trading and Profit and Loss Account for the six months to the end of December c. Prepare the Balance Sheet for the same period. d. From the results of your cash flow comment on the viability of Naaz's proposed business. You should provide some recommendations within vour discussion

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Auditing Standards In The United States Comparing And Understanding Standards For ISA And PCAOB

Authors: Asokan Anandarajan, Gary Kleinman

2nd Edition

1953349323, 9781953349323

More Books

Students also viewed these Accounting questions

Question

6.7 Discuss strategies for recruiting a more diverse workforce.

Answered: 1 week ago