1. Use the data provided below to complete the cash flow forecast in Table 1

Alice Kids club was set up on 14th January 2012, with enough capital to purchase a warehouse and its grounds on rent which was to be converted into an exciting and colourful play park, with rides and attractions ideally suited to young children. By the end of April the work has been completed in time for the grand opening on 1st May 2012.

Alice was pleased to see that Kids club still had an opening balance of 9,250 in its bank account on 1st May.

Kids club agreed an annual rental of 60,000 per annum, being paid in June and December. Alice estimates monthly costs as follows:

Wages are expected to be 5,000 per month in the autumn and winter (September to February); 5,500 in March, April and May; and 8,000 in June, July and August.

Maintenance is expected to cost 200 per month. Administration is forecast at 3,800 per month.

Electricity, gas and other costs are due in March, June, September and December. Alice estimates that these costs will be 2,500 each.

Alice is targeting a major 7,500 marketing campaign in the opening month (May). The main target market is families, but Alice hopes to attract tourists in July and August, and is planning extra expenditure of 2,000 per month in June and July. In August and from September onwards marketing is expected to cost 300 per month.

Cash sales are expected to be 15,000 per month, except for July 25,000 and August 30,000.

Credit sales will be accepted for party bookings. These will be 2,500 per month, but payment to the firm will take place exactly 1 month after the sales were recorded, so no money will be earned from these sales in May.

Table 1: Cash flow forecast for Kids Club Ltd. May-Dec 2012 (10 marks) May June July August Sept October Nov Dec Inflows f f f f f f Cash sales Credit Sales Total Inflows Outflows Wages Maintenance & administration Utilities Marketing Rent Total outflows Net Cash flow Opening balance Closing balance