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Naaz started up a business, and pays £80,000 into her business bank account on 1st July and budgets as follows:
Fittings to be purchased on 1st July for £90,000, and this will have to be paid for by the end of the month. Depreciation is £10,000 a year.
Wages: £10,000 per month.
Rent of warehouse will be £84,000 per annum, payable in monthly instalments at the start of each month.
Other costs incurred in the running of the business (excluding purchases) will be £40,000 per month, payable in the month in which the costs are incurred.
Purchases will be supplied on one month’s credit (i. e. purchases in July will
have to be paid for by the end of August).
Half of the sales are expected to be for cash; the remaining half on credit. Naaz is budgeting to allow two months’ credit by her credit customers (i. e. credit sales in July will not be settled until September).
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Naaz started up a business, and pays £80,000 into her business bank account on 1st July and budgets...
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