The Question. Scenario You have a small business engaged in the retail sale of ladies and gentlemen's fashions. An accounting year-end is 31st December, and it is now 1st January 2022. Information included on the Statement of Financial Position at 31st December 2021 was as follows: Trade receivables (due to be received in January 2022) Trade receivables (due to be received in February 2022) Trade payables (due to be paid in January 2022) Closing inventories Cash at bank Share capital Retained profits/losses brought forward Dividend payable (due to be paid in January 2022) Taxation payable (due to be paid in January 2022) Shop fixtures and fittings at cost Depreciation on shop fixtures and fittings Long-term loan 15000 16000 9000 3000 36200 20000 18400 2600 1200 10000 5000 24000 The shop fixtures and fittings are depreciated on a 10% straight-line basis and there is no scrap value. You are preparing a business plan for the following three months from January to March 2022. The plan will include Cash Flow forecast, a forecast Income Statement and a forecast Statement of Financial Position. You predict the following: You rent out office space to another local business and receive 410 per month. . Your motor vehicle running expenses will total 450 per and are payable in the month in they are urred. Other expenses will be 2500 a month payable in the month in which they occur. . You are going to buy a delivery van for the business in January at a cost of 19000 for cash. You will depreciate the van on a 20% straight-line basis. The scrap value of the van is expected to be 3000 at the end of its useful economic life. The tax charge for the three months to 31st March 2022 will be 13738 but this will not be paid until May 2022. . Your motor vehicle running expenses will total 450 per month and are payable in the month in which they are incurred. Other expenses will be 2500 a month payable in the month in which they occur. You are going to buy a delivery van for the business in January at a cost of 19000 for cash. You will depreciate the van on a 20% straight-line basis. The scrap value of the van is expected to be 3000 at the end of its useful economic life. The tax charge for the three months to 31st March 2022 will be 13738 but this will not be paid until May 2022. A dividend of 940 was proposed to cover the three months, January to March 2022 but this will not be paid until April 2022. Interest on the bank loan is expected to be 120 a month. Closing inventory at 31st March 2022 is expected to be 6900. Marking Scheme: Questions 1-2: 13%, Question 3: 28%, Question 4: 29%, Question 5: 30%. Question 1 You predict that sales for January 2022 are expected to be 50000 increasing by 30% in February 2022 and by a further 7% in March 2022. Also, only 70% of your customers pay cash and the remaining 30% are given 2 month credit. Fill in the following table (Sales Working 1). All numbers must be entered as whole numbers. Enter "O" in a cell if, in any month, there are no sales. The same applies to cash sales receipts, credit sales receipts and trade receivables b/i. Jan Feb March Total Sales W1 ('s) Total Sales Cash sales receipts Credit sales receipts Trade receivables b/f Total cash receipts Question 2 In addition to the above information, you predict that purchases are expected to be 60% of sales and that you take on average 1 month credit from your suppliers. Fill in the following table (Purchases Working 2). Al numbers must be entered as whole numbers. Enter "0"in a cell it, in any month, there are no credit purchases payments. The same applies to trade payables bf. Jan Feb March Total Purchases W2 (E's) Total Purchases Credit purchases payments Trade payables b/ Total cash paid Question 3 Prepare a cash flow forecast for the three months to 31st March 2022. Enter "o" in a cell it, in any month, there are no cash receipts/ cash payments. Trendy Clothing Ltd. Cash Flow Forecast for the three months period from 1 January to 31 March 2022 CASH IN / RECEIPTS ('s) Jan Sales W1 Feb March Total Rental Income Total Receipts CASH OUT / PAYMENT Revenue expenses Purchases W2 Dividend other exnenses Question 3 Prepare a cash flow forecast for the three months to 31st March 2022. Enter "O" in a cell it, in any month, there are no cash receipts/ cash payments. Trendy Clothing Ltd. Cash Flow Forecast for the three months period from 1 January to 31 March 2022 CASH IN / RECEIPTS ('s) Jan Sales W1 Feb March Total Rental Income Total Receipts CASH OUT / PAYMENT Revenue expenses Purchases W2 Dividend Other expenses Interest Motor Expenses Tax Van Total Payments Net Receipts Opening Balance Closing Balance Question 4 Prepare a forecast income statement for the three month period to 31st March 2022 Trendy Clothing Ltd. Forecast Income Statement for the three months from 1 January to 31 March 2022 Sales Revenue Less: Cost of Sales Opening Inventory Purchases Closing Inventory Gross Profit Other income Less Revenue Expenditure Other expenses Motor expenses Depreciation on fixtures and fittings Depreciation on van Total Revenue Expenditure Operating Profit (PBIT) Finance costs - Interest Paid Profit / Loss before tax Taxation Profit for the period Question 5 Prepare a forecast statement of financial position as at 31st March 2022: Trendy Clothing Ltd. Forecast Statement of Financial Position as at 31 March 2022 Net Book Value Non-Current Assets Fixtures & fittings Van Total Non-Current Assets Current Assets Inventory Trade Receivables Cash Total Current Assets Total Assets Equity Share Capital Retained profits losses Total Equity Non-Current Liabilities Borrowings - Bank Loan Current Liabilities Trade payables Dividend payable Taxation Payable Total Current Liabilities Total Equity and Liabilities