Prepare a profit budget for the 6 months ending 30th June 2021 (the month-by-month breakdown is not required only the total for the 6 months)
GORGIO F LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020
  £ £ £
Non-current assets      
Property, Plant & Machinery (W3)      
Long-term investments      
    Total      
Current assets    
Prepaid Debenture Interest      
Inventory      
Trade Receivables      
Bank      
       
     
Total assets    
     
Equity and Liabilities    
Ordinary Share Capital    
Share premium    
Retained Earnings    
General Reserves    
     
Non-current liabilities    
10% Debentures – 2020    
     
Current liabilities    
Trade Payables    
Accrued audit fees    
 
     
Equity and total liabilities    

 

 

(W3) Non-current assets      
  Property, Plant & Machinery      
    Cost Accumulated Depreciation NBV
    £ £ £
  Buildings      
  Fixtures & Fittings      
  Total      

 

 

 

 

 

Question B2 (12marks)

Grazyna Ltd, a new business, starts trading in sports shoes on 1st January 2021 and expects to make the following transactions for the 6 months ending 30th June2021:

 

(i)         Sales are expected to be 300 units (sports shoes) per month for the 4months from January to April then 400            units per month from May to June.

(ii)        The selling price will be £50 per unit.

(iii)       All sales will be cash sales with cash received in the same month the sale takes place.

(iv)       Purchases of inventory (sports shoes) will take place on month after the sales take place. (i.e., purchase takes           place in January will be paid in February). Each unit of inventory will cost £30.

(v)        Wages are expected to be £1000 per month and will be paid in the month in which they are incurred.

(vi)       Rent will be £2000 per month to be paid quarterly in advance (i.e., the rent payment for January, February and        March 2021 will be made on 1st January 2021).

(vii)      General overheads are expected to cost £1000 per month and will be paid in the month in which they are    incurred.

 

Required

 

  1. a) Prepare a cash budget for the 6 months from January to June 2021. Show the cash receipts and cash payments the business expects to have each month and the cash balance at the end of each month. (7marks)

 

  1. b) Prepare a profit budget for the 6 months ending 30th June 2021 (the month-by-month breakdown is not required only the total for the 6 months). (5marks)