mr norman set up a new business on 1 januar y 20×8 he invested 50 000 in the new bus 530154

Mr Norman set up a new business on 1 Januar y 20X8. He invested £50,000 in the new business on that date. The following information is available.

1 Gross profit was 20% of sales. Monthly sales were as follows:

2 50% of sales were for cash. Credit customers (50% of sales) pay in month following sale.

3 The supplier allowed one month”s credit.

4 Monthly payments were made for rent and rates £2,200 and wages £600.

5 On 1 Januar y 20X8 the following payments were made: £80,000 for a five-year lease of business premises and £3,500 for insurances on the premises for the year. The realizable value of the lease was estimated to be £76,000 on 30 June 20X8 and £70,000 on 31 December 20X8.

6 Staff sales commission of 2% of sales was paid in the month following the sale.

Required:

(a) A purchases budget for each of the first six months.

(b) A cash flow statement for the first six months.

(c) A statement of operating cash flows and financial position as at 30 June 20X8.

(d) Write a brief letter to the bank supporting a request for an overdraft.