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You need to calculate an estimate of working capital and projected Balance Sheet for the year ended on 31.12.20x7 from the following information. (i) Share
You need to calculate an estimate of working capital and projected Balance Sheet for the year ended on 31.12.20x7 from the following information.(i) Share capital 500,000 , Long-term loan (with fixed 15% p.a. interest) of 200,000 ., Fixed assets at cost of 300,000 . (ii) The expected ratios of cost to selling price are: Raw materials 60%, Labour 10%, Overheads 20%. (iii) Raw materials are in stores for an average of 2 months. (iv) Finished goods are kept in warehouse for 3 months. (v) Expected level of production 120,000 units per year. (vi) Each unit of production is expected to be in process for 1 month. (vii) Credit given by suppliers is 2 months. (viii) 20% of the output is sold for cash payment. Time lag in payment from debtors is 3 months. (ix) Selling price is 5 per unit (x) Labour and overheads will accrue evenly during the year.
(i) Share capital 500,000 , Long-term loan (with fixed 15% p.a. interest) of 200,000 ., Fixed assets at cost of 300,000 .
(ii) The expected ratios of cost to selling price are: Raw materials 60%,
Labour 10%,
Overheads 20%.
(iii) Raw materials are in stores for an average of 2 months.
(iv) Finished goods are kept in warehouse for 3 months.
(v) Expected level of production 120,000 units per year.
(vi) Each unit of production is expected to be in process for 1 month. (vii) Credit given by suppliers is 2 months.
(viii) 20% of the output is sold for cash payment. Time lag in payment from debtors is 3 months.
(ix) Selling price is 5 per unit
(x) Labour and overheads will accrue evenly during the year.
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