| |
a) A forecast profit and loss account for the three months to the end of March
Budgeted Profit & Loss Account for 3 months ending 31 March |
Sales |
|
|
|
190,000 |
Cost of sales |
|
|
|
|
Opening stock |
|
0 |
|
|
Purchases (Note 1) |
|
153,000 |
|
|
|
|
|
|
|
Less: Closing stock |
|
-96,000 |
|
|
|
|
|
|
_57,000 |
Gross profit (Note 2) |
|
|
|
133,000 |
|
|
|
|
|
Expenses |
|
|
|
|
Wages and salaries |
|
41,000 |
|
|
Rent of premises |
(Note 3) |
37,500 |
|
|
General expenses |
|
20,000 |
|
|
Depreciation of equip |
(Note 4) |
12,000 |
|
110,500 |
Operating profit |
|
|
|
22,500 |
Loan interest |
(Note 5) |
|
|
_2,700 |
Net profit before tax |
|
|
|
19,800 |
|
|
|
|
|
Note 1 : Purchases is calculated as follows
- Cost of sales + closing stock – opening stock
- €57,000 + €96,000 – 0) = €153,000
Note 2: Gross profit is calculated as 70% of sales
Note 3: The annual rent is €150,000 for which only 3/12 should be charged.
Note 4 : Depreciation is 12.5% of €384,000 x 3/12.
Note 5: Loan Interest is charged at 6% of €180,000 x 3/12
b) A monthly forecast cash budget for January February and March
Cash budge for 3 months January to March
|
Jan |
Feb |
Mar |
| Receipts |
€ |
€ |
€ |
| Share capital |
250,000 |
|
|
| Bank loan |
180,000 |
|
|
| Cash sales (30% of current month) |
15,000 |
18,000 |
24,000 |
| Debtors (70% of sales 2 months previous) |
_____0 |
____0 |
35,000 |
|
445,000 |
18,000 |
59,000 |
|
|
|
|
| Payments |
|
|
|
| Purchases (Note 1) |
0 |
85,000 |
28,000 |
| Wages and salaries (current month) |
12,000 |
13,500 |
15,500 |
| Rent of premises (150,000 x 6/12) |
75,000 |
|
|
| Gen expense (prev month) |
|
6,000 |
6,500 |
| Loan principal |
1,500 |
1,500 |
1,500 |
| Loan interest |
900 |
900 |
900 |
| Equip and furniture. |
192,000 |
_____0 |
192,000 |
|
281,400 |
106,900 |
244,400 |
|
|
|
|
| Net Cash Inflow/(Outflow) |
163,600 |
-88,900 |
-185,400 |
| Opening balance |
0 |
163,600 |
74,700 |
| Closing balance |
163,600 |
74,700 |
-110,700 |
Note 1 Calculation of purchases
Workings - Purchase |
|
Jan |
Feb |
Mar |
Jan-Mar |
|
|
€ |
€ |
€ |
€ |
Sales |
|
50,000 |
60,000 |
80,000 |
190,000 |
Mult by Cost of sales %) |
0.30 |
0.30 |
0.30 |
0.30 |
Gives: Cost of sales |
|
15,000 |
18,000 |
24,000 |
57,000 |
Add: Closing stock (given) |
70,000 |
80,000 |
96,000 |
96,000 |
Less: Opening stock |
|
_____0 |
-70,000 |
-80,000 |
_____0 |
Gives: Purchases |
|
85,000 |
28,000 |
40,000 |
153,000 |
c) A forecast balance sheet at end of March
Budgeted Balance Sheet on 31 March |
|
|
|
|
|
€ |
|
€ |
Fixed Assets at Book Value (384,000 - depreciation 12,000) |
|
372,000 |
Current Assets |
|
|
|
|
|
|
Stock on hand |
|
|
|
96,000 |
|
|
Debtors |
(Note 1) |
|
98,000 |
|
|
Prepaid rent |
(Note 2) |
|
37,500 |
|
|
|
|
|
|
|
231,500 |
|
|
Current Liabilities |
|
|
|
|
|
|
Bank overdraft |
|
|
110,700 |
|
|
Trade creditors |
(Note 3) |
40,000 |
|
|
Accrued general exp (Note 4) |
|
|
7,500 |
|
|
|
|
|
|
|
158,200 |
|
|
Net Current Assets |
|
|
|
|
|
73,300 |
Total assets less current liabilities |
|
|
|
445,300 |
Less: Bank Loan at 6% (Note 5) |
|
|
175,500 |
Net Assets |
|
|
|
|
|
269,800 |
|
|
|
|
|
|
|
|
Share Capital and Reserves |
|
|
|
|
|
Ordinary share capital |
|
|
|
|
250,000 |
Profit and loss account |
|
|
|
_19,800 |
|
|
|
|
|
|
|
269,800 |
|
|
|
|
|
|
|
|
|
Note 1: Debtors is calculated as 70% of both February (€60,000) and March’s sales (€80,000).
Note 2: Rent was paid for 6 months. By the end of March only 3 months have elapsed thus rent is prepaid by 3 months = €150,000 x 3/12.
Note 3: Trade creditor represents March’s purchases.
Note 4 : Accrued expenses represent unpaid general expenses for March.
Note 5 : €1500 a month was paid off the loan
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