During the first 6 months of the business, Surya is confident of making a large sale each month to a trading business with whom he has already been negotiating. From then on, Surya will start to make sales as a result of recommendations and advertisements he plans to place in tv and radio stations. Surya invested £10,000 as capital in the business. a. He anticipates that sales during the six months to 31 December 2022 will be made at a gross profit of 35%. He estimates they will be as follows: Forecast sales July £3,800 August £2,890 September £2,050 October £3,450 November £5,000 December £2,680 b. In addition to making purchases to meet sales, Surya plans to purchase, in July 2022, a stock of silk/ linen shirts for £2,680, so that he can meet any unexpected one-off orders. c. Sales will be made on one month’s credit terms. d. Purchases credit terms: 20 % cash in the same month, 30% next month and remainder in 2 months’ time. e. Other expenses are as follows: Telephone costs £420 per quarter, payable in arrears Electricity £725 per quarter, payable in arrears Accountant’s fees £250 per month, payable in the same month Other expenses £90 per month f. Surya plans to make drawings of £725 each month. g. In July 2022, Surya’s mother will make a loan to the business of £15,000. The loan will carry interest @ 8%, which will be payable annually in arrears, with the first interest payment being due on 30th June, 2023. Surya plans to use £9,500 of the loan to buy a van later in the year, probably in November. Till then, delivery costs will be £120 per month for July till October. Prepare the CASH BUDGET for Surya Trading for the six months ended 31 December, 2022.
During the first 6 months of the business, Surya is confident of making a large sale each month to a trading business with whom he has already been negotiating. From then on, Surya will start to make sales as a result of recommendations and advertisements he plans to place in tv and radio stations. Surya invested £10,000 as capital in the business. a. He anticipates that sales during the six months to 31 December 2022 will be made at a gross profit of 35%. He estimates they will be as follows: Forecast sales July £3,800 August £2,890 September £2,050 October £3,450 November £5,000 December £2,680 b. In addition to making purchases to meet sales, Surya plans to purchase, in July 2022, a stock of silk/ linen shirts for £2,680, so that he can meet any unexpected one-off orders. c. Sales will be made on one month’s credit terms. d. Purchases credit terms: 20 % cash in the same month, 30% next month and remainder in 2 months’ time. e. Other expenses are as follows: Telephone costs £420 per quarter, payable in arrears Electricity £725 per quarter, payable in arrears Accountant’s fees £250 per month, payable in the same month Other expenses £90 per month f. Surya plans to make drawings of £725 each month. g. In July 2022, Surya’s mother will make a loan to the business of £15,000. The loan will carry interest @ 8%, which will be payable annually in arrears, with the first interest payment being due on 30th June, 2023. Surya plans to use £9,500 of the loan to buy a van later in the year, probably in November. Till then, delivery costs will be £120 per month for July till October. Prepare the CASH BUDGET for Surya Trading for the six months ended 31 December, 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During the first 6 months of the business, Surya is confident of making a large sale each month to a
trading business with whom he has already been negotiating. From then on, Surya will start to make
sales as a result of recommendations and advertisements he plans to place in tv and radio stations.
Surya invested £10,000 as capital in the business.
a. He anticipates that sales during the six months to 31 December 2022 will be made at a gross
profit of 35%. He estimates they will be as follows:
Forecast sales
July £3,800
August £2,890
September £2,050
October £3,450
November £5,000
December £2,680
b. In addition to making purchases to meet sales, Surya plans to purchase, in July 2022, a stock of
silk/ linen shirts for £2,680, so that he can meet any unexpected one-off orders.
c. Sales will be made on one month’s credit terms.
d. Purchases credit terms: 20 % cash in the same month, 30% next month and remainder in 2
months’ time.
e. Other expenses are as follows:
Telephone costs £420 per quarter, payable in arrears
Electricity £725 per quarter, payable in arrears
Accountant’s fees £250 per month, payable in the same month
Other expenses £90 per month
f. Surya plans to make drawings of £725 each month.
g. In July 2022, Surya’s mother will make a loan to the business of £15,000. The loan will carry
interest @ 8%, which will be payable annually in arrears, with the first interest payment being
due on 30th June, 2023. Surya plans to use £9,500 of the loan to buy a van later in the year,
probably in November. Till then, delivery costs will be £120 per month for July till October.
Prepare the CASH BUDGET for Surya Trading for the six months ended 31 December, 2022.
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