Mr Norman set up a new business on 1 January 20X8. He invested €50,000 in the new business on that date. The following information is available.

1. Gross profit was 20% of sales. Monthly sales were as follows:

Month Sales €

January...........................15,000

February..........................20,000

March.............................35,000

April..............................40,000

May...............................40,000

June...............................45,000

July................................50,000

2. 50% of sales were for cash. Credit customers (50% of sales) pay in month following sale.

3. The supplier allowed one month's credit.

4. Monthly payments were made for rent and rates €2,200 and wages €600.

5. On 1 January 20X8 the following payments were made: €80,000 for a five-year lease of business premises and €3,500 for insurances on the premises for the year. The realisable value of the lease was estimated to be €76,000 on 30 June 20X8 and €70,000 on 31 December 20X8.

6. Staff sales commission of 2% of sales was paid in the month following the sale.

Required:

(a) A purchases budget for each of the first six months.

(b) A cash flow statement for the first six months.

(c) A statement of operating cash flows and financial position as at 30 June 20X8.

(d) Write a brief letter to the bank supporting a request for an overdraft.