Schrute Ltd has been trading for many years and on 1 May 2021 it had £12,000 in the bank. Every month it makes sales valuing £60,000, half of which is for cash, with one month’s credit given on the other half. In the month of May a bad debt of £2,000 was written off. It takes two months credit on its monthly purchases of £28,000. During May the company issued 20,000 shares with a £1 nominal value, securing a 50% premium on the issue. Also during the month depreciation on non-current assets of £3,000 was charged. What was Rose Ltd’s bank balance on 31 May?

Schrute Ltd has been trading for many years and on 1 May 2021 it had £12,000 in the bank. Every month it makes sales valuing £60,000, half of which is for cash, with one month’s credit given on the other half. In the month of May a bad debt of £2,000 was written off. It takes two months credit on its monthly purchases of £28,000. During May the company issued 20,000 shares with a £1 nominal value, securing a 50% premium on the issue. Also during the month depreciation on non-current assets of £3,000 was charged. What was Rose Ltd’s bank balance on 31 May?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 3P

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Schrute Ltd has been trading for many years and on 1 May 2021 it had £12,000 in the bank. Every month it makes sales valuing £60,000, half of which is for cash, with one month’s credit given on the other half. In the month of May a bad debt of £2,000 was written off. It takes two months credit on its monthly purchases of £28,000. During May the company issued 20,000 shares with a £1 nominal value, securing a 50% premium on the issue. Also during the month depreciation on non-current assets of £3,000 was charged. What was Rose Ltd’s bank balance on 31 May? a) £74,000 b) £69,000 c) £72,000 d) £64,000
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