QUESTION SEVEN Bonya Furnishings Company is a small carpet and upholstery cleaning business with both commercial and domestic customers. The Statement of Financial Position of the company at 31 October 2011 was as follows: K K K Non-current assets (NBV) Freehold premises 32,000 Fixtures, fittings, equipment 4,000 Motor vehicles 12,000 18 48,000 Current assets Inventory 3,200 Accounts receivable 20,000 23,200 Current liabilities Accounts payable 4.000 Bank overdraft 8,200 (12,200) Net working capital 11,000 59.000 Share capital 59.000 The company allows credit to its commercial customers but domestic customers are expected to pay cash. On the basis of past performance, the company expects sales in the coming six months to be as follows: Month Sales (K) November 16,000 December 16,000 January 20,000 February 40,000 March 12.000 April 12,000 The proportions of cash and credit sales are usually as follows: Month Cash sales (%) Credit sales (%) November 30 December 45 55 All other months 20 80 70 Customers who are on extended credit normally pay in the month following sale. The company's invoice price is made up of 55% wages, 25% materials and 20% profit. Wages are paid in the month incurred. Half the materials purchased each month are subject to a 3% cash discount for immediate payment and it is the company's policy to take advantage of this discount. The company pays the remainder of the purchases, without discount, in the month after purchase. Goods are normally purchased in the month they are sold except December when owing to a supplier's shut down, half December's goods are purchased in November. Expenditure on petrol and other expenses is K2,600 per month. Additionally, the noncurrent assets are depreciated at 25% per annum on reducing balance basis. Showing all your workings properly, prepare a) Bonya Company's cash budget for the six months November to April b) A forecast income statement for the half year ended 30 April 2011. c) A forecast statement of financial position as at 30 April 2012