Required:

1. Prepare a statement for Toys are You Ltd showing the companys forecast cash position at 31 December 2021.
2. Prepare the entitys Income Statement and Statement of Financial Position for the year ending 31 December 2021.
3. Evaluate the statements you have produced and give any advice to Toys are You Ltd that you think may help the entity in 2021.
4. Discuss the concepts used to produce the Income statement which means that profit is very different to cash.

The Statements of Financial Position for the last two years' trading of Toys are You Ltd are presented below: Statement of Financial Position as at 31 December Non-current Assets 2019 000's Machines at cost Less depreciation to date 240 2020 000's 300 400 280 120 60 Current Assets Inventory Receivables Bank 10 50 20 80 20 50 20 90 Less Current Liabilities Payables 20 30 30 Net Current Assets Net Assets 50 170 70 130 Capital and Reserves Issued Share Capital Reserves 150 20 170 100 30 130 Sales for 2021 are expected to be 30,000 per month. Customers will still be given one month's credit on sales. The gross margin on sales is expected to be 40%. Toys are You Ltd have also managed to negotiate two month's credit on all their purchases from 16 January 2021. By the end of 2021 inventory will be expected to be at a level of one month's worth of sales. Total running expenses (excluding purchases and depreciation) are expected to be 10,000 each month, payable as incurred. The machines are depreciated on a straight- line basis assuming an estimated useful life of ten years. The entity will want to purchase further machinery next year to the value of 100,000, possibly by cash