You are required to write a $1,000$ word report answering the following questions.

You are currently employed as the management accountant of Skip Ltd$,$ which was incorporated on $1$ January $2024.$ The opening statement of financial position $($balance sheet$)$ of the business is as follows

During January $2024,$ the business intends to make payments of $50,000$ for a leasehold property, $20,000$ for equipment and $10,000$ for a motor vehicle. The business will also purchase initial trading inventories costing $30,000$ on credit.

The business has produced the following estimates:

Sales revenue for January will be $10,000$ and will increase at the rate of $4,000$ a month until April. In May, sales revenue will rise to $25,000$ and in subsequent months will be maintained at this figure.

The gross profit percentage from goods sold will be $25$ per cent.

There is a risk that supplies of trading inventories will be interrupted towards the end of the accounting year. The business, therefore, intends to build up its initial level of inventories $(30,000)$ by purchasing $2,000$ of inventories each month in addition to the monthly purchases necessary to satisfy monthly sales requirements. All purchases of inventories $($including the initial inventories$)$ will be on one month's credit.

Sales revenue will be divided equally between cash and credit sales. Credit customers are expected to pay two months after the sale is agreed.

Wages and salaries will be $1000$ a month. Other overheads will be $600$ a month for the first four months and $800$ thereafter. Both types of expense will be payable when incurred.

$80$ per cent of sales revenue will be generated by salespeople who will receive $5$ per cent commission on sales revenue. The commission is payable one month after the sale is agreed.

The business intends to purchase further equipment in June for $8,000$ cash.

Depreciation will be provided at the rate of $5$ per cent a year on property and $20$ per cent a year on equipment. $($Depreciation has not been included in the overheads mentioned in $5$ above.$)$