Question 1 Newtake Records Ltd owns a small chain of shops selling rare jazz and classical recordings to serious collectors. The company has presented it current financial position (balance sheet) and forecasted transactions as below: Statement of financial position as at 31 May 000 ASSETS Non-current assets Power, Plant and Equipment 560 Current assets Cash 130 Inventory 30 160 Total assets 720 230 200 430 EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Borrowings loans Current liabilities Trade payables Total equity and liabilities 110 180 720 The following forecast information was prepared for the business some months earlier: June July Aug Sept Oct 000 000 000 000 000 Expected sales 230 320 250 140 120 Purchases 180 142 94 75 66 Admin expenses 55 56 53 48 46 Selling expenses 24 28 26 21 19 Tax payment 22 Loan Interest 1 1 1 1 1 Loan repayment 4 4 4 4 4 Shop refurbishment 14 18 6 Nov 000 110 57 45 18 1 4 Notes 1. All sales income is received in the month of sale. However, 50 per cent of customers pay with a credit card. The charge made by the credit card business to Newtake Records Ltd is 3 per cent of the sales value. These charges are in addition to the selling expenses identified above. The credit card business pays Newtake Records Ltd in the month of sale. 2. Suppliers allow one month's credit. The purchases for May is 135,000. The first three months purchases are subject to a contractual agreement that must be honoured. 3. The gross profit margin is 50 per cent. 4. Administration expenses are paid when incurred. This item includes a charge of 15.000 each month in respect of depreciation. 5. Selling expenses are payable in the following month Selling expenses for May is 22,000. 6. The closing inventory balance on 304 November will be 24,000. 7. The trade payable balance on 30 November will be 153,000. Required: (a) Prepare a projected cash flow statement for the six months ending 30 November that shows the cash balance at the end of each month. (15 Marks) 6) Prepare a projected income statement for the six months ending 30 November. (A monthly breakdown of profit is not required.) (15 Marks) A projected statement of financial position at 30 November. (20 Marka) Question 1 Newtake Records Ltd owns a small chain of shops selling rare jazz and classical recordings to serious collectors. The company has presented it current financial position (balance sheet) and forecasted transactions as below: Statement of financial position as at 31 May 000 ASSETS Non-current assets Power, Plant and Equipment 560 Current assets Cash 130 Inventory 30 160 Total assets 720 230 200 430 EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Borrowings loans Current liabilities Trade payables Total equity and liabilities 110 180 720 The following forecast information was prepared for the business some months earlier: June July Aug Sept Oct 000 000 000 000 000 Expected sales 230 320 250 140 120 Purchases 180 142 94 75 66 Admin expenses 55 56 53 48 46 Selling expenses 24 28 26 21 19 Tax payment 22 Loan Interest 1 1 1 1 1 Loan repayment 4 4 4 4 4 Shop refurbishment 14 18 6 Nov 000 110 57 45 18 1 4 Notes 1. All sales income is received in the month of sale. However, 50 per cent of customers pay with a credit card. The charge made by the credit card business to Newtake Records Ltd is 3 per cent of the sales value. These charges are in addition to the selling expenses identified above. The credit card business pays Newtake Records Ltd in the month of sale. 2. Suppliers allow one month's credit. The purchases for May is 135,000. The first three months purchases are subject to a contractual agreement that must be honoured. 3. The gross profit margin is 50 per cent. 4. Administration expenses are paid when incurred. This item includes a charge of 15.000 each month in respect of depreciation. 5. Selling expenses are payable in the following month Selling expenses for May is 22,000. 6. The closing inventory balance on 304 November will be 24,000. 7. The trade payable balance on 30 November will be 153,000. Required: (a) Prepare a projected cash flow statement for the six months ending 30 November that shows the cash balance at the end of each month. (15 Marks) 6) Prepare a projected income statement for the six months ending 30 November. (A monthly breakdown of profit is not required.) (15 Marks) A projected statement of financial position at 30 November. (20 Marka)
