Question 1b (35%) Present the budgeted balance sheet per December 31, 2022.
The Norwegian company DigiNet AS imports and sells equipment for computer networks. The company's Finance Department has recently developed the following budgeted income statement for the year 2022 (all figures in NOK). Sales income Gain from sales of assets Cost of goods sold Salaries and other personnel costs Depreciation Other payable operational costs Operational profit Financial revenue Financial costs Profit before taxes Tax costs Profit after taxes 84 000 000 500 000 43 000 000 30 000 000 2 000 000 6 000 000 3 500 000 30 000 1 400 000 2 130 000 596 400 1 533 600 The company's balance sheet per December 31, 2021, is expected to look like this: Fixed assets Inventory Accounts receivable Bank deposits Assets 30 000 000 8 775 000 5 994 000 1 303 500 46 072 500 Share capital Premium fund Retained earnings Long-term debts Payable taxes Payable dividend Accounts payable Bank overdraft facility account Short-term loan from share holder Other short-term liabilities Equity and debts 9 000 000 1 800 000 2 100 000 19 500 000 390 000 900 000 2 850 000 3 495 000 4 608 000 1 429 500 46 072 500 Your task today is to help the company to present a budgeted balance sheet per December 31, 2022, and a cash flow budget for 2022. Here is some additional information that may be relevant for this job: 1. You may disregard the effect of Value Added Tax and also assume that the company's tax cost is equal to the payable tax (no deferred taxes) 2. Sales and purchases are distributed evenly over the year, and we may assume that all months have 30 days 3. 10% of the sales income comes from customers who pay cash or use debit cards. On average, 20% of the credit sales are paid the same month that the sales occur, 70% in the month thereafter, and 10% after two months. 4. On average, 30% of the cost of sales invoices are paid in the month of the purchase, 50% the month thereafter and 20% after two months. The company plans to reduce the balance of the inventory by kr 1 000 000 during 2022. Other payable costs are paid the same month that they are taken to cost. 5. The company is expected to owe its employees kr 90 000 in payable salaries at the end of 2021 and this is expected to increase to kr 110 000 by the end of 2022. This is a part of the other short-term liabilities. Apart from the above, salaries and other personnel costs will be paid the same month as they have been taken to cost. 6. Accrued interest costs, which also is a part of other short-term liabilities, are expected to be kr 360 000 at the end of 2021, and this is expected to be reduced to kr 320 000 at the end of 2022. There are no accruals for earned interest revenues, neither in the beginning nor at the end of 2022. 7. DigiNet AS plans to purchase fixed assets for kr 8 000 000 during 2022, which will be paid in full by the end of the year. The company also plans to sell used fixed assets that will have a book value of kr 1 500 000 at the time of the sales. 8. To fund part of the investment in new fixed assets, the company plans an emission of shares that is expected to give the company kr 5 500 000 in new capital, of which kr 1 500 000 is a share premium. 9. DigiNet AS plans to borrow more money and will in 2022 apply for a new long-term bank loan of kr 5 000 000. During 2022 the company will also pay instalments on the existing long-term loan of altogether kr 2 500 000, and the short-term loan from the shareholder will also be paid in full by the end of the year. 10. The payable taxes are paid in full the year after they are accrued for in the balance sheet as a short-term liability 11. There will be a new accrual for payable dividend of kr 200 000 at the end of 2022, and the remaining budgeted profit will be transferred to retained earnings. 12. The company has two bank accounts: One traditional account and one overdraft facility. All the in- and outgoing payments go through the overdraft account. Regardless of how the balance of the overdraft account develops during the year, the balance of the traditional account should increase with kr 500 000 during 2022. The Norwegian company DigiNet AS imports and sells equipment for computer networks. The company's Finance Department has recently developed the following budgeted income statement for the year 2022 (all figures in NOK). Sales income Gain from sales of assets Cost of goods sold Salaries and other personnel costs Depreciation Other payable operational costs Operational profit Financial revenue Financial costs Profit before taxes Tax costs Profit after taxes 84 000 000 500 000 43 000 000 30 000 000 2 000 000 6 000 000 3 500 000 30 000 1 400 000 2 130 000 596 400 1 533 600 The company's balance sheet per December 31, 2021, is expected to look like this: Fixed assets Inventory Accounts receivable Bank deposits Assets 30 000 000 8 775 000 5 994 000 1 303 500 46 072 500 Share capital Premium fund Retained earnings Long-term debts Payable taxes Payable dividend Accounts payable Bank overdraft facility account Short-term loan from share holder Other short-term liabilities Equity and debts 9 000 000 1 800 000 2 100 000 19 500 000 390 000 900 000 2 850 000 3 495 000 4 608 000 1 429 500 46 072 500 Your task today is to help the company to present a budgeted balance sheet per December 31, 2022, and a cash flow budget for 2022. Here is some additional information that may be relevant for this job: 1. You may disregard the effect of Value Added Tax and also assume that the company's tax cost is equal to the payable tax (no deferred taxes) 2. Sales and purchases are distributed evenly over the year, and we may assume that all months have 30 days 3. 10% of the sales income comes from customers who pay cash or use debit cards. On average, 20% of the credit sales are paid the same month that the sales occur, 70% in the month thereafter, and 10% after two months. 4. On average, 30% of the cost of sales invoices are paid in the month of the purchase, 50% the month thereafter and 20% after two months. The company plans to reduce the balance of the inventory by kr 1 000 000 during 2022. Other payable costs are paid the same month that they are taken to cost. 5. The company is expected to owe its employees kr 90 000 in payable salaries at the end of 2021 and this is expected to increase to kr 110 000 by the end of 2022. This is a part of the other short-term liabilities. Apart from the above, salaries and other personnel costs will be paid the same month as they have been taken to cost. 6. Accrued interest costs, which also is a part of other short-term liabilities, are expected to be kr 360 000 at the end of 2021, and this is expected to be reduced to kr 320 000 at the end of 2022. There are no accruals for earned interest revenues, neither in the beginning nor at the end of 2022. 7. DigiNet AS plans to purchase fixed assets for kr 8 000 000 during 2022, which will be paid in full by the end of the year. The company also plans to sell used fixed assets that will have a book value of kr 1 500 000 at the time of the sales. 8. To fund part of the investment in new fixed assets, the company plans an emission of shares that is expected to give the company kr 5 500 000 in new capital, of which kr 1 500 000 is a share premium. 9. DigiNet AS plans to borrow more money and will in 2022 apply for a new long-term bank loan of kr 5 000 000. During 2022 the company will also pay instalments on the existing long-term loan of altogether kr 2 500 000, and the short-term loan from the shareholder will also be paid in full by the end of the year. 10. The payable taxes are paid in full the year after they are accrued for in the balance sheet as a short-term liability 11. There will be a new accrual for payable dividend of kr 200 000 at the end of 2022, and the remaining budgeted profit will be transferred to retained earnings. 12. The company has two bank accounts: One traditional account and one overdraft facility. All the in- and outgoing payments go through the overdraft account. Regardless of how the balance of the overdraft account develops during the year, the balance of the traditional account should increase with kr 500 000 during 2022
