John smith is planning to start a business selling bicycles on 1 January 2020. He has £25, 000 capital to invest in the business and has arranged a bank loan of £25,000 over 5 years with a fixed rate interest of 6% per annum. Details of the anticipated income and expenditure for John Bikes Ltd are as follows: £ Cash sales 30,000 per month credit Sales 5,000 per month (1 month credit) Purchases 10,000 per month (2 month's credit Rent and rates 24,000 per annum payable in full on 1 January Insurance 6,000 per annum payable monthly Advertising 1,000 quarterly starting in January Telephone and Internet 100 per month Salaries 6,100 per month Lighting and heating 200 per month Equipment 12,000 payables in full on 1 January Fixtures and fittings 20,000 payables in full on 31 January Interest on bank loan will be paid at the end of each month. The equipment will be depreciated over 4 years and the fixtures and fittings over 5 years, neither is expected to have a residual value . Closing Inventory is £10,000 at 31 March 2020 Required a) Prepare a cash flow budget for the 3months 1 January to 31 March 2020 b) Budgeted income statement for the 3months 1 January to 31 March2020 c) Prepare a budgeted statement of financial position at 31 March 2020 d) State the benefit of a cash budget to a business
John smith is planning to start a business selling bicycles on 1 January 2020.
He has £25, 000 capital to invest in the business and has arranged a bank loan
of £25,000 over 5 years with a fixed rate interest of 6% per annum. Details of
the anticipated income and expenditure for John Bikes Ltd are as follows:
£
Cash sales 30,000 per month
credit Sales 5,000 per month (1 month credit)
Purchases 10,000 per month (2 month's credit
Rent and rates 24,000 per annum payable in full on 1 January
Insurance 6,000 per annum payable monthly
Advertising 1,000 quarterly starting in January
Telephone and Internet 100 per month
Salaries 6,100 per month
Lighting and heating 200 per month
Equipment 12,000 payables in full on 1 January
Fixtures and fittings 20,000 payables in full on 31 January
Interest on bank loan will be paid at the end of each month.
The equipment will be
over 5 years, neither is expected to have a residual value . Closing
Inventory is £10,000 at 31 March 2020
Required
a) Prepare a
b)
c) Prepare a budgeted
d) State the benefit of a
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