Make a Cash Budget:r

When Mark left university, he decided to run a business selling and repairing computers. In order to do this, he set up a limited company, Datahelp Limited. He planned to deposit 100 in the company's bank account on 1 January 2022 and issue 100 shares, with a nominal value of 1 each, in his own name. He also planned for the company to borrow 8,000 from his father Mark planned to rent premises for his business at 2,000 a month and lease test and IT equipment for 600 a month. He would pay 4,000 for signage and furniture. For each of the first two months he would spend 7,500 on computers for resale and components for repairs. In the third month he hoped to buy 7,000 of computers on credit. At the outset, he would hire a technician, at a cost of 2,000 a month, to do the repair work, whilst he mostly dealt with selling and administration. He would pay himself 1,000 a month in salary and planned to take further income as dividends. He estimated that he would use 200 worth of electricity per month and expected to get the first bill at the beginning of April. He would pay 1,200 for 12 months' insurance. Other expenses paid for during the first 3 months would be: per month 333 Rates Utilities (excluding electricity) Advertising Mileage (not deliveries) Each month he hoped to sell computers for 8,667 and charge 2,500 for repairs At the end of 3 months he estimated that he would have inventory, of unsold computers, which would have cost him 10,000 300 300 250 He estimated that wear and tear on the long-term assets of the business would amount to about 800 a year, so they would need replacing after about 5 years (5 x 800 = 4,000)