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a) Prepare a budgeted trading, profit and loss account for the three months ended 30 November
This company hires out equipment and does not par-take in the buying and selling of goods and services. Thus there is no requirement for a trading account and the profit and loss account is simply sales less expenses as follows. Note the direct costs amount to 10% of sales.
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Budgeted Profit and Loss Account |
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September |
October |
November |
Total |
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€ |
€ |
€ |
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€ |
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|
|
|
|
|
|
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Sales |
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66000 |
72600 |
79860 |
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218,460 |
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Less Expenses |
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|
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Direct costs |
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|
21,846 |
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Labour costs |
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54,615 |
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Overheads |
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|
43,030 |
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Rent |
|
|
|
|
6,000 |
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Loan Interest |
|
|
|
825 |
126,316 |
Net Profit |
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92,144 |
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b) Prepare a budgeted monthly cash budget for September, October and November
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Cash Budget |
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September |
October |
November |
Total |
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€ |
€ |
€ |
€ |
Income |
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Cash sales |
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33000 |
36300 |
39930 |
109230 |
Cash received from credit sales |
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22000 |
33000 |
36300 |
91300 |
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Total income |
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55000 |
69300 |
76230 |
200530 |
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Expenditure |
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Direct costs |
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6,600 |
7,260 |
7,986 |
21,846 |
Rent |
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12,000 |
|
12,000 |
Labour |
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|
16,500 |
18,150 |
19,965 |
54,615 |
Overheads |
|
11,000 |
12300 |
13730 |
37030 |
Accruals |
|
|
|
15000 |
|
15000 |
B/S Creditors |
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15,000 |
|
|
15000 |
Loan Interest |
|
|
|
825 |
825 |
Capital repayment on loan |
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|
3000 |
3000 |
Total expenses |
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49100 |
64710 |
45506 |
159316 |
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Surplus |
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5900 |
4590 |
30724 |
41214 |
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O/balance |
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3560 |
9460 |
14050 |
3560 |
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C/balance |
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9460 |
14050 |
44774 |
44774 |
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Note: The cash received from credit sales in September relates to credit sales in August represented by the debtors figure in the opening balance sheet. Overheads figure excludes depreciation as it is a non-cash item
c) Prepare a forecast balance sheet as at 30 November
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Balance Sheet as at 30th November |
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€ |
€ |
€ |
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Cost |
Accum Dep |
NBV |
| Fixed Assets |
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298,000 |
6,000 |
292,000 |
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| Current Assets |
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Debtors |
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39930 |
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Bank |
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44774 |
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prepayment |
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8,000 |
92,704 |
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| Current Liabilities |
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Creditors for capital expenditure |
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30,000 |
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Long-term Liabilities |
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Loan |
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30,000 |
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324,704 |
| Financed By |
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Share Capital |
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205,000 |
Profit and loss (92,144 + 27,560) |
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|
|
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119,704 |
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324,704 |
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Note:
- The fixed assets at cost figure is €268,000 + €30,000
- The prepayment relates to rent prepaid for 4 months x €2000 per month
- Creditors for capital expenditure relates to the new fixed assets purchased. This is a current liability as it will be paid in December.
- The long term loan has been reduced by a repayment of €3,000
- The profit and loss balance in the balance sheet is made up of the profit and loss balance in the opening balance sheet of €27560 + the projected profit of €268,000.
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