Problems
3.4 The following is the balance sheet (in abbreviated form) of Projections Ltd for last year:
Balance sheet as at 31 December
£000
Non-current assets
Cost 290
Accumulated depreciation (110)
180
Current assets
Inventories 26
Trade receivables 35
Cash 5
66
Total assets 246Equity
Share capital 150
Retained profit 48
198
Current liabilities
Trade payables 21
Taxation 27
48
Total equity and liabilities 246The 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 balance sheet 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 balance sheet as at the end
of next year, to the nearest £1,000.‘