Principle of accounting

 

 

 

 

10.8. fashion scenes ltd owns  a chain of eight shops selling fashion goods in the past the company maintained a healthy cash balance .how ever this has fallen in recent months and at the end of the September 2011it had an  overdraft of $70000 in view  of this its managing director has asked you to prepare a cash forecast for the next six months .you have collected the following data ..                                                                                                                                                                                                                                                                                                                                                                                

 

           

 

                                                           oct          nov        dec        jan       feb        mar                               

                                                                                                                                    

Sales forecast                                                           140               180         260       60      100       120

 

Purchase                                            160               180          140      50       50         50

 

Wages and the salaries                  30                   30            40        30       30         32

 

Rent                                                                                    60

 

Rates                                                                                                                       40

 

Other expenses                               20                   20              20        20        20          20

 

Refurbishing shops                                                                        80                                                                                                                                   inventory at 1 october  amounted  to $170,000 and accounts payable were $70,000 the purchase in October ,November December  are contractually committed and the those shown for January February and march are the minimum necessary to  restock  withspring fashions cost of sales is 50%b of sales and supplies  allow one months credit on purchase include depreciation  of $10,000 per months .              required                                                                                                         (a).compute  the cash balance at the end of each month for the six months to 31 march 2012.                                                                                                                         (b) compute  the inventory levels at the end of each months for the six months to 31 march 2012.                                                                          (c).prepare an income statement for the six months ended 31 march 2012.                                                                                                                                           (d). what problems might fashion scenes ltd face in the six months and  how would you attempt to overcome them.