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1.Cash forecast for the six months ended 30thSeptember2021.
. . You have ascertained the following information to assist with your assessment: Cloud 9 is registered for VAT and charges 23% VAT on its sales. VAT returns are submitted on-line following the end of each (calendar) two monthly period and payment is made by the 23rd of the relevant month. Ignore taxation other than VAT. A loan of 69,000,000 was taken out with Irish Bank plc on 1st Apr 2015 and is repayable in full on 1st Apr 2025. The interest rate on the loan is 10% per annum, payable quarterly on 1st January, 1st April, 1st July and 1st Oct each year. All Cloud 9's sales and purchases are on 30-day credit terms. All other expenses are paid immediately on receipt of invoice. Cloud 9 depreciates it's property, plant & equipment on a straight-line basis as follows: Buildings 40 years Machinery 20 years Delivery vans Fixtures & fittings Office furniture & equipment 10 years The following appendices are included: Appendix 1: Trial balance extracted from Cloud 9's records @ 31st March 2021. Appendix 2: Details of Go Online's new manufacturing line and financial projections for the six months from 1st April 2021 to 30th September 2021 Appendix 3: Abridged financial statements for two previous years to 31st March 2020 and 2019. O o 0 5 years 10 years o . O o O Please note that whilst your report package is to include specified statements and reports, it is necessary to include all relevant data and conclusions into the financial assessment to ensure that the full economic impact is considered. Appendix 1 - Trial Balance @31st March 2021 Trial Balance as at 31st March 2021 000 000 50,000 206,655 69,000 100,000 25,000 85,000 12,750 18,500 7,400 14,000 4,200 13,500 5,400 Share capital Retained earnings @ 31st March 2020 Loan Building (cost) Building accumulated depreciation @ 31st Mar 2020 Machinery (cost) Machinery accumulated depreciation @31st Mar 2020 Delivery vans (cost) Delivery vans accumulated depreciation @31st Mar 2020 Fixtures & fittings (cost) Fixtures & fittings accumulated depreciation @ 31st Mar 2020 Office furniture & equipment (cost) Office furniture & equipment accumulated depreciation @ 31st Mar 2020 Inventory @ 1st April 2020 Trade receivables Bank overdraft Trade payables VAT payable Sales revenue Purchases Wages and salaries Light and heat Selling expenses Advertising Client entertainment Legal and professional fees Maintenance and repairs Motor expenses Office expenses Interest expense 147,500 87,300 15,950 45,700 6,220 370,000 248,750 62,500 7,250 6,500 3,000 2,750 1,500 4,800 6,500 3,750 5,175 818,275 818,275 On 31st March 2021 the following expenses had not been accounted for. Cloud 9 plans to pay the outstanding amounts in April 2021. o Wages - overtime for March 2021 3,200,000 Petrol for delivery vans (inclusive of VAT @ 13.5%) 150,000 Legal fees (inclusive of VAT @ 23%) 1,230,000 Inventory on hand @ 31st March 2021 is valued at 171,250,000 Amounts due from trade receivables at 31st March 2021 are expected to be received 50% in April and remainder in May. Amounts due to trade payables at 31st March 2021 are expected to be paid in full in October E A B D 1 Trading and Profit & Loss Account for the year ending 31st March 2021 2 '000 '000 3 Sales Revenue 370,000.00 4 Less: Cost of Goods Sold 10 225,000.00 5 Gross Profit 145,000.00 6 Less: Expenses 7 Wages & Salaries 21 65,700.00 8 Light & Heat 7,250.00 9 Selling Expenses 6,500.00 10 Advertising 3,000.00 11 Client Entertainment 2,750.00 12 Legal & Professional fees 31 2,500.00 13 Maintenance & Repairs 4,800.00 14 Motor Expenses 4 6,650.00 15 Office Expenses 3,750.00 16 Depreciation Expenses 51 13,200.00 17 Interest Expenses 61 6,900.00 123,000.00 18 Profit for the year 22,000.00 19 20 Balance Sheet as at 31st March 2021 21 E'000 '000 22 Non Current Assets 23 Property, Plant & Equipment 1 163,050.00 163,050.00 24 Current Assets 25 Inventories 171,250.00 26 Trade Receivable 87,300.00 27 Total Current Assets 258,550.00 28 Total Assets 421,600.00 29 30 Equity & Liabilities 31 Share Capital E 50,000.00 32 Retained Earnings 228,655.00 33 Total Equity 278,655.00 34 Non Current Liabilities 35 Loan 69,000.00 69,000.00 36 Current Liabilities 37 Bank Overdraft 15,950.00 38 Trade Payable 45,700.00 39 VAT Payable 5,990.00 40 Accrued Expenses 6,305.00 41 Total Current Liabilities 73,945.00 42 Total Liabilities 421,600.00 43 Appendix 2 - Financial projections for six months ended 30th September 2021 Go Online Cloud 9 produce high quality, durable, branded sport shoes for athletes. This is an elite market reliant on high profile sporting event endorsements and branding. Having reviewed the success of companies such as Nike., Go Online proposes to diversify into the general leisure wear market with Cloud 9's own version of light-weight sport shoes for general leisure use. As this product line will not be elite sport shoes. it will be less expensive to produce but, as it is important not to compromise Cloud 9's quality reputation, it will still be more expensive to produce than competitor products. Direct costs per unit are forecast as... Cost type Per unit Materials: 43 per meter (incl of VAT @ 23%) 2meters Labour: 15 per hour 7 hours Go Online will aim its product at the quality end of the leisure market and the expected selling price of 250(exclusive of VAT) per unit will reflect this. 307.50 inclusive of VAT As it also envisages that the product line expanding in the future Go Online has provisionally signed up two well-known online 'influencers' to promote the product and enhance its marketability for the next six months. These influencers will each be paid 25,000 + VAT @ 23% per month for the promotion campaign. Other cost projections to be considered are: Fixed costs October November December Admin/sales salaries 1,750,000 1,750,000 1,750,000 Light & heat 510,750 510,750 510,750 Selling expenses 1,168,500 1,168,500 1,168,500 Advertising 135,300 135,300 135,300 Maintenance/repairs 492,000 492,000 492,000 Motor expenses 650,375 650,375 650,375 Office expenses 215,250 215,250 215,250 Depreciation (per depreciation policy) Loan interest (per loan agreement) January 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 February 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 March 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 Total 10,500,000 3,064,500 7,011,000 811,800 2,952,000 3,902,250 1,291,500 Note: The following cost projections have been stated inclusive of VAT as follows: VAT @ 23% VAT @ 13.5% Selling expenses Light & heat Advertising Petrol Maintenance & repairs Motor expenses (note: 1,872,750 relates to petrol costs) Office expenses In order for this line to be considered successful, it must produce a profit of 12,000,000 by the end of March 2021. No other product will be produced or sold during this period. Calculate Sales using this target profit. Cash Forecast for 6 months ended 30th September 2021 Apr May Jun Jul Aug Sept Receipts Trade receivables Cash receipts (70%) Credit receipts (30%) Total receipts Payments (inclusive of VAT) Trade payables Accrued expenses Purchases of materials Direct wages Admin/sales salarics Light & heat Selling expenses Advertising Maintenance/repairs Motor expenses inel petrol) Office expenses Endorsement fees Interest payment VAT payments Total payments Net cash movement Opening Cash balance Closing cash balance . . You have ascertained the following information to assist with your assessment: Cloud 9 is registered for VAT and charges 23% VAT on its sales. VAT returns are submitted on-line following the end of each (calendar) two monthly period and payment is made by the 23rd of the relevant month. Ignore taxation other than VAT. A loan of 69,000,000 was taken out with Irish Bank plc on 1st Apr 2015 and is repayable in full on 1st Apr 2025. The interest rate on the loan is 10% per annum, payable quarterly on 1st January, 1st April, 1st July and 1st Oct each year. All Cloud 9's sales and purchases are on 30-day credit terms. All other expenses are paid immediately on receipt of invoice. Cloud 9 depreciates it's property, plant & equipment on a straight-line basis as follows: Buildings 40 years Machinery 20 years Delivery vans Fixtures & fittings Office furniture & equipment 10 years The following appendices are included: Appendix 1: Trial balance extracted from Cloud 9's records @ 31st March 2021. Appendix 2: Details of Go Online's new manufacturing line and financial projections for the six months from 1st April 2021 to 30th September 2021 Appendix 3: Abridged financial statements for two previous years to 31st March 2020 and 2019. O o 0 5 years 10 years o . O o O Please note that whilst your report package is to include specified statements and reports, it is necessary to include all relevant data and conclusions into the financial assessment to ensure that the full economic impact is considered. Appendix 1 - Trial Balance @31st March 2021 Trial Balance as at 31st March 2021 000 000 50,000 206,655 69,000 100,000 25,000 85,000 12,750 18,500 7,400 14,000 4,200 13,500 5,400 Share capital Retained earnings @ 31st March 2020 Loan Building (cost) Building accumulated depreciation @ 31st Mar 2020 Machinery (cost) Machinery accumulated depreciation @31st Mar 2020 Delivery vans (cost) Delivery vans accumulated depreciation @31st Mar 2020 Fixtures & fittings (cost) Fixtures & fittings accumulated depreciation @ 31st Mar 2020 Office furniture & equipment (cost) Office furniture & equipment accumulated depreciation @ 31st Mar 2020 Inventory @ 1st April 2020 Trade receivables Bank overdraft Trade payables VAT payable Sales revenue Purchases Wages and salaries Light and heat Selling expenses Advertising Client entertainment Legal and professional fees Maintenance and repairs Motor expenses Office expenses Interest expense 147,500 87,300 15,950 45,700 6,220 370,000 248,750 62,500 7,250 6,500 3,000 2,750 1,500 4,800 6,500 3,750 5,175 818,275 818,275 On 31st March 2021 the following expenses had not been accounted for. Cloud 9 plans to pay the outstanding amounts in April 2021. o Wages - overtime for March 2021 3,200,000 Petrol for delivery vans (inclusive of VAT @ 13.5%) 150,000 Legal fees (inclusive of VAT @ 23%) 1,230,000 Inventory on hand @ 31st March 2021 is valued at 171,250,000 Amounts due from trade receivables at 31st March 2021 are expected to be received 50% in April and remainder in May. Amounts due to trade payables at 31st March 2021 are expected to be paid in full in October E A B D 1 Trading and Profit & Loss Account for the year ending 31st March 2021 2 '000 '000 3 Sales Revenue 370,000.00 4 Less: Cost of Goods Sold 10 225,000.00 5 Gross Profit 145,000.00 6 Less: Expenses 7 Wages & Salaries 21 65,700.00 8 Light & Heat 7,250.00 9 Selling Expenses 6,500.00 10 Advertising 3,000.00 11 Client Entertainment 2,750.00 12 Legal & Professional fees 31 2,500.00 13 Maintenance & Repairs 4,800.00 14 Motor Expenses 4 6,650.00 15 Office Expenses 3,750.00 16 Depreciation Expenses 51 13,200.00 17 Interest Expenses 61 6,900.00 123,000.00 18 Profit for the year 22,000.00 19 20 Balance Sheet as at 31st March 2021 21 E'000 '000 22 Non Current Assets 23 Property, Plant & Equipment 1 163,050.00 163,050.00 24 Current Assets 25 Inventories 171,250.00 26 Trade Receivable 87,300.00 27 Total Current Assets 258,550.00 28 Total Assets 421,600.00 29 30 Equity & Liabilities 31 Share Capital E 50,000.00 32 Retained Earnings 228,655.00 33 Total Equity 278,655.00 34 Non Current Liabilities 35 Loan 69,000.00 69,000.00 36 Current Liabilities 37 Bank Overdraft 15,950.00 38 Trade Payable 45,700.00 39 VAT Payable 5,990.00 40 Accrued Expenses 6,305.00 41 Total Current Liabilities 73,945.00 42 Total Liabilities 421,600.00 43 Appendix 2 - Financial projections for six months ended 30th September 2021 Go Online Cloud 9 produce high quality, durable, branded sport shoes for athletes. This is an elite market reliant on high profile sporting event endorsements and branding. Having reviewed the success of companies such as Nike., Go Online proposes to diversify into the general leisure wear market with Cloud 9's own version of light-weight sport shoes for general leisure use. As this product line will not be elite sport shoes. it will be less expensive to produce but, as it is important not to compromise Cloud 9's quality reputation, it will still be more expensive to produce than competitor products. Direct costs per unit are forecast as... Cost type Per unit Materials: 43 per meter (incl of VAT @ 23%) 2meters Labour: 15 per hour 7 hours Go Online will aim its product at the quality end of the leisure market and the expected selling price of 250(exclusive of VAT) per unit will reflect this. 307.50 inclusive of VAT As it also envisages that the product line expanding in the future Go Online has provisionally signed up two well-known online 'influencers' to promote the product and enhance its marketability for the next six months. These influencers will each be paid 25,000 + VAT @ 23% per month for the promotion campaign. Other cost projections to be considered are: Fixed costs October November December Admin/sales salaries 1,750,000 1,750,000 1,750,000 Light & heat 510,750 510,750 510,750 Selling expenses 1,168,500 1,168,500 1,168,500 Advertising 135,300 135,300 135,300 Maintenance/repairs 492,000 492,000 492,000 Motor expenses 650,375 650,375 650,375 Office expenses 215,250 215,250 215,250 Depreciation (per depreciation policy) Loan interest (per loan agreement) January 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 February 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 March 1,750,000 510,750 1,168,500 135,300 492,000 650,375 215,250 Total 10,500,000 3,064,500 7,011,000 811,800 2,952,000 3,902,250 1,291,500 Note: The following cost projections have been stated inclusive of VAT as follows: VAT @ 23% VAT @ 13.5% Selling expenses Light & heat Advertising Petrol Maintenance & repairs Motor expenses (note: 1,872,750 relates to petrol costs) Office expenses In order for this line to be considered successful, it must produce a profit of 12,000,000 by the end of March 2021. No other product will be produced or sold during this period. Calculate Sales using this target profit. Cash Forecast for 6 months ended 30th September 2021 Apr May Jun Jul Aug Sept Receipts Trade receivables Cash receipts (70%) Credit receipts (30%) Total receipts Payments (inclusive of VAT) Trade payables Accrued expenses Purchases of materials Direct wages Admin/sales salarics Light & heat Selling expenses Advertising Maintenance/repairs Motor expenses inel petrol) Office expenses Endorsement fees Interest payment VAT payments Total payments Net cash movement Opening Cash balance Closing cash balance
