The following is the statement of financial position (in abbreviated form) of Projections Ltd for last year:
Question:
The following is the statement of financial position (in abbreviated form) of Projections Ltd for last year:
The following plans have been made for next year:
1 Sales revenue is expected to total £350,000, all on credit. Sales will be made at a steady rate over the year, and two months’ credit will be allowed to customers.
2 £200,000 worth of inventories will be bought during the year, all on credit. Purchases will be made at a steady rate over the year and suppliers (trade payables) will allow one month’s credit.
3 New non-current assets will be bought, and paid for, during the year at a cost of £30,000. No disposals of non-current assets are planned. The depreciation expense for the year will be 10 per cent of the cost of the non-current assets owned at the end of the year.
4 The value of inventories at the end of the year is expected to be double what it was at the beginning of the year.
5 Operating expenses, other than depreciation, are expected to total £52,000, of which £5,000 will remain unpaid at the end of the year.
6 During the year, the tax noted in the start-of-the-year statement of financial position will be paid.
7 The tax rate can be assumed to be 25 per cent. The tax will not be paid during the year.
8 A dividend of £10,000 will be paid during the year.
Prepare a projected income statement for next year and a statement of financial position as at the end of next year, to the nearest £1,000.
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