It is the first quarter of 2020 and the first cases of the Corona Virus Disease, COVID-19 have been announced in Namibia. Subsequently the Namibia Graduate School (NBS) at which you are enrolled for a postgraduate diploma has suspended face to face classes and rolled out an online Business Accounting course. Moreover, the company at which you are employed, Ivan & Klopp Business Consulting (IBC) Ltd has also suspended its operations and ordered you and all other employees to work from home. Your immediate supervisor is Ivan who is the companys financial manager. Ivan has arranged all your office equipment to be installed at your house at Okahandja and he requests you to sign an acknowledgement of receipt of the following items of equipment: Asset Serial # Date Purchased Cost Laser-jet HP 400 Printer 00000222 1 January 2018 N$15 000 ProBook HP Laptop 00000279 1 April 2019 N$18 900 Soho A office furniture set 78915468 1 January 2015 N$112 800 RUT 240 WIFI device 00000371 1 October 2019 N$900 The immediate task that you have been given is assisting Ivan in the preparation of the financial statements of IBC Ltd for the year ended 31 December 2019. Although this task is ordinarily Ivans responsibility, he has asked you to help with the adjusting entries that are required for the final extended trial balance. Therefore, Ivan has sent to you the following information: 1. Depreciation must be provided as follows: Equipment at 25% per annum on the book value. Motor vehicles at 15% per annum on cost. 2. Revenue for the year includes several credit notes for allowances given to customers for trade discounts, faulty goods or wrong invoices. These credit notes total N$75 325. 3. A debtors account of N$310 must be written off as irrecoverable and a provision for credit losses of 5% of debtors must be present in the books at year end. 4. Interest on loan is still owing. The loan was granted by Nedbank on 1 September 2019. 5. Interest on investment must still be received. The money was invested on 1 May 2014. 6. The insurance premium for 15 months has been paid N$9 375. 7. The tenant who uses the Western Wing of the administration building of IBC Ltd, paid rent for January to September only N$102 150. 8. On 1 January 2019, there was office stationery on hand amounting to N$1 230. Additional stationery was ordered from Nashua for N$11 230 in February. By 31 December 2019, stationery at hand was only N$955. 9. On the 05th of January 2020, a client Shoemann CC was declared insolvent by the High Court. He is unable to pay an outstanding debt to IBC Ltd of N$75 000. 10. A company vehicle used by the managing director (MD), Mr. Klopp was involved in a collision along the B1 Highway on the 26th of February 2020. The insurance has indicated that it will pay N$245 000 which amounts to merely 35 percent of the carrying amount of the vehicle. Another task that you are required to complete involves assisting the MD in the compilation of the management accounts for the six months ended 30 June 2020. Mr. Klopp would like to present the reports in a management meeting scheduled for 31 August 2020. The following information has been collected from the various books and records of the company. 1. An analysis of the companys costs reflects the following: Using a technique called high-low method, Mr Klopp estimates that the variable costs for the year will be N$200 000 and Fixed costs N$350 000. The average contribution margin ratio is estimated at 0.34. 2. Revenue is expected to grow at 2 per cent per month while expenses will grow by 1.8 per cent per month. 3. The company would like to invest excess cash in marketable securities but will sell them should it have cash flow limitations. While working from home youve found yourself with excess time, so you decided to take private clients to raise additional cash. One of your clients is Harambee Ltd which produces and sells soccer balls. The company also requires management reports. Harambee Ltd currently uses an integrated absorption costing system for external reporting purposes and variable costing for internal reporting purposes. The management of Harambe Ltd gave you the following information for the month of July 2019: 1. Actual sales were N$1 120 000 and the selling price was exactly as budgeted at N$40 per unit. 2. The prime cost (raw material and labour) was N$20 per unit as budgeted. 3. The company did not have any raw material and work-in-process inventory during July 2019. Finished soccer balls on hand are valued at budgeted cost and were as follows: 1 July 2019 5 000 balls 31 July 2019 1 000 balls 4. Monthly production overheads were budgeted according to the following cost-volume relationship: Total production overheads N$200 000 N$260 000 Production units 20 000 35 000 The company budgeted to produce and sell 30 000 units in July 2019. Actual variable production overheads for July 2019 were also as budgeted, but actual fixed production overheads for July 2019 totaled N$90 000. The actual variable marketing and administrative expenses were exactly as budgeted at N$1,20 per unit and the budgeted and actual fixed marketing and administrative expenses were N$2 280 000 per annum, being incurred evenly per month throughout the year. By the time you finished the above assignments, you are so confident with yourself that you contemplate opening your own company and start trading on 01 January, 2021. You decided that you need to do a little cash flow forecast that you can use to assess the viability of the company. You have made the following notes: You expect that sales will be N$10 000 in February 2021. The bank balance at the end of March 2021 is expected to be N$20 000. Sales are expected to grow at 7% a month 20% of sales are COD (cash/check on delivery) 30% of sales are paid during the month following the sale 50% of sales are paid in the second month after the sale Manpower and fixed costs are 20% of sales Inventory purchases are 50% of the following months sales With the above notes, you set out to prepare a cash forecast of your own company.

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