Newtake Records Ltd owns a small chain of shops selling DVDs and CDs. At the beginning of
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Newtake Records Ltd owns a small chain of shops selling DVDs and CDs. At the beginning of June the business had an overdraft of £35,000 and the bank had asked for this to be eliminated by the end of November. As a result, the directors have recently decided to review their plans for the next six months.
The following plans were prepared for the business some months earlier:
Transcribed Image Text:
Sales revenue Purchases Administration expenses Selling expenses Taxation payment Finance payments Shop refurbishment May 000 180 135 52 22 - 5 - June July Aug Sept 000 000 000 000 230 180 55 24 - 5 T 320 142 56 28 - 5 14 250 94 53 26 22 5 18 140 75 48 21 - 56 Oct Nov 000 000 120 66 46 19 - 5 110 57 45 18 - 5 I Notes: 1 The inventories level at 1 June was 112,000. The business believes it is preferable to main- tain a minimum inventories level of 40,000 over the period to 30 November. 2 Suppliers allow one month's credit. 3 The gross profit margin is 40 per cent. 4 All sales proceeds are received in the month of sale. However, 50 per cent of customers pay with a credit card. The charge made by the credit card business to Newtake Records Ltd is 3 per cent of the sales revenue value. These charges are in addition to the selling expenses identified above. The credit card business pays Newtake Records Ltd in the month of sale. 5 The business has a bank loan, which it is paying off in monthly instalments of 5,000. The interest element represents 20 per cent of each instalment. 6 Administration expenses are paid when incurred. This item includes a charge of 15,000 each month in respect of depreciation. 7 Selling expenses are payable in the following month.
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Related Book For
Accounting And Finance For Non Specialists
ISBN: 9780273745884
7th Edition
Authors: Peter Atrill, Eddie Mclaney
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