Tasty Sauces (TS) was incorporated three years ago. TS produces a range of branded sauces which are exceptionally popular, especially in the warmer months when they are bought for barbeques. The directors are planning to reorganize the business as a result of a forecast rapid growth in revenue. This will involve outsourcing all manufacturing, relocation of the business premises and development of new products.

The growth will be funded by equity finance from Denzil Dragon (Denzil), proceeds from the disposal of TS's manufacturing unit and an increase in the bank overdraft facility. Denzil is a wealthy individual who specializes in providing finance for rapidly expanding businesses in return for a minority shareholding in the business. The directors have prepared profit and cash flow forecasts for the three years ending 31 December 2025 in support of the request for the overdraft facility. The company's bank requires the cash flow forecasts to be examined and reported have requested that you lead this examination.

The directors have provided the following additional information: 1) The significant growth experienced since incorporation was due to a two-year contract with Terose, a supermarket with stores across the country. The contract specifies that TS cannot supply any other supermarket during the period of the contract. The contract is due to expire in June 2023. Credit terms are 75 days after delivery. The contract specifies that if Terose purchases a specified volume of sauces over the period of the contract, TS has to pay Terose a rebate at the end of the contract. 2) TS is in negotiations with five other large supermarkets, with stores across the UK and Europe, which want to purchase TS's sauces when the contract with Terose expires in June 2023. The directors are seeking four-year contracts with each supermarket with credit terms of 30 days. 3) TS will cease its own production and has agreed with Mixit Ltd (Mixit), a specialist manufacturer, that Mixit will manufacture TS's sauces from July 2023 onwards. Mixit has requested payment in advance each month, for 12 months, until a trading relationship is established after which it will give 30 days credit. 4) TS will sell its manufacturing unit, which it owns, as it will then be surplus to requirements. The manufacturing unit will take six months to decommission and all equipment will be scrapped. A property developer has expressed interest in the site and TS is currently applying for permission to change the use of the site from industrial to residential.

5) TS proposes to rent a new combined warehouse, office and research facility from July 2023. Rent is payable quarterly in advance with a rent-free period for the first six months. TS plans to develop new products such as soups and curries at this facility. It is expected that soups will take one year to develop and curries two years before they can be sold to supermarkets.

6) Denzil will provide equity funding in equal tranches in March 2023 and June 2024. Half of Denzil's investment will be repurchased by TS once TS achieves a specified level of profit. TS has a policy of paying cash dividends equivalent to one quarter of its annual profits.

Required: From the information provided in the scenario, identify the key receipts and payments that you would expect to be included in the cash flow forecasts for the three years ending 31 December 2025 in respect of the expansion plans. For each receipt and payment, you should identify the specific matters you would consider when reviewing the reasonableness of the assumptions underlying that receipt or payment.