Assignment 2 1) Student name and number: 2) Student name and number: In the following exercise you are asked to prepare income statement and cash flow forecasts as well as estimated balance sheet for a start-up. Company is called Tmi Netshop.com and it will sell computers, various household gadgets and related accessories via web. See the detailed requirements (from A to D) below the asignment details. VAT, payroll taxes, social security and pension fees should be included into the forecasts. As this is first budget of the company there is no prior year information to be taken into account. Tmi Netshop.com estimates for the period 1.1.- 30.4.2015 Budgeted sales Cash sales (paid via online banking) Invoiced sales Total excl. VAT Jan 10,000 Feb Mar Apr total 2,400 12,400 20,000 4,800 24,800 12,000 2,880 14,880 15,500 3,720 19,220 26,000 6,240 32,240 63,500 15,240 78,740 24,000 5,760 29,760 VAT 24% incl. VAT excl. VAT VAT 24%incl. VAT excl. VAT 37,200 30,000 36,000 8,640 44,640 VAT 24% incl. VAT 7,200 32,800 7,872 40,672 33,200 7,968 41,168 110,000 26,400 136,400 48,300 11,592 59,892 59,200 14,208 73,408 173,500 41,640 215,140 Credit sales have 30 days net payment terms i.e. sales will be collected in the following month, Budgeted purchases Total 48.500 VAT 24%incl. VAT 11,640 60,140 23,300 5,592 28,892 26,000 6,240 32,240 Purchases excl. VAT Jan Feb Mar Apr Purchases have been made on 15 days net payment terms i.e. half of the purchases made during the month will be paid during the month when bought and half in the following month. On 30th of April the company has products at stock worth 22 500 (purchase cost excl. VAT). No stock on 1st Jan business was started in January. VAT summary Output VAT Input VAT VAT payable(+)/rec. (-) Payment day Company wants to use the negative VAT for the next payment due 44,000 10,560 54,560 141,800 34,032 175,832 Jan Feb Mar Apr 7,200 8,640 11,592 14,208 purchase other exp. 11,640 1,824 13,464 5,592 1,452 7,044 6,240 384 6,624 10,560 252 10,812 Salaries 2 employees one full- time, one part-time -6,264 12th Mar 1,596 12th Apr 4,968 12th May 3,396 12th Jun Social Security Gross Salaries Payroll Net Payment tax salaries (2%) Jan 5000 1800 3200 100 Feb 4400 1440 2960 88 Mar 4400 1440 2960 88 Apr 5000 1800 3200 100 18800 6480 12320 376 Payroll taxes and social security payments will be settled to tax office on the 12th of the following month. Pension fee of the owner (not salaried person) 1800 will be settled in February. Pension fees of the salaried employees 3500 for the period 1 Jan 30 Apr will be settled in March. Other employee related insurances will not be considered here. Rent 120 square meters x 12/m2/month = 1440 per month, landlord is not VAT registered Advertising, mailing, telecommunication, electricity, freight etc. Expenses Total excl. VAT VAT 24%incl. VAT Jan 600 144 744 Feb 850 204 1,054 Mar 800 192 992 Apr 1,050 252 1,302 3,300 792 4,092 All paid in the month when cost incurred. Machinery and equiment M&E Total excl. VAT VAT 24% incl. VAT Jan Feb 7,000 5,200 1,680 8,680 1,248 6,448 Mar 800 13,000 192 3,120 16,120 992 All paid in the month when goods received M&E will be depreciated in 4 years straight line basis. Financing Owner is investing 16000 in January into this business. On 2nd January company draws a bank loan of 16000. First amortisation of 1000 will be made in April. The interest rate is 4% p.a. and interest for the first 4 months will be paid in April as well. Income taxes Tax prepayment will be paid in March and April, 1200 each month. In the budgeted income statement the tax expense will be 22% of the profit before taxes. Owner's withdrawals Owner is not drawing any money during the period from the company. ASSIGNMENT: Prepare budgeted income statement for the period Jan-April 2015 (4) months total A only). B C Prepare monthly cash flow forecast for the period Jan-Apr 2015 (each month separately). Please note that VAT should be considered in cash flows where applicable. If the cash- out exceeds cash available owner will invest additional equity. Prepare the budgeted balance sheet as of end of April 2015. Owner is expecting to receive 3700/month + 10% rate of return (per annum) for investment - estimations promising to fullfill his expectations? Answer to item D: his D are Prepare your statements for A, B and C below!