The major shareholder/director of Esrever Ltd has obtained average data for the industry as a whole. He wishes to see what the forecast results and position of Esrever Ltd would be if in the ensuing year its performance were to coincide with the industry averages. At 1 July 20X0, actual figures for Esrever Ltd included:
For the year ended 30 June 20X1 the following forecast information is available:
1 Depreciation of non-current assets (on reducing balance)
2 Net current assets will be financed by a bank overdraft to the extent necessary.
3 At 30 June 20X0 total assets minus current liabilities will be £231,808.
4 Profit after tax for the year will be 23.32% of gross profit and 11.16% of total assets minus all external liabilities, both long-term and short-term.
5 Tax will be at an effective rate of 20% of profit before tax.
6 Cost of sales will be 68% of turnover (excluding VAT).
7 Closing inventory will represent 61.9 days’ average cost of sales (excluding VAT).
8 Any difference between total expenses and the aggregate of expenses ascertained from this given information will represent credit purchases and other credit expenses, in each case excluding VAT input tax.
9 A dividend of 2.5p per share will be proposed.
10 The collection period for the VAT-exclusive amount of trade receivables will be an average of 42.6 days of the annual turnover. All the company’s supplies are subject to VAT output tax at 15%.
11 The payment period for the VAT-exclusive amount of trade payables (purchases and other credit expenses) will be an average of 29.7 days. All these items are subject to (reclaimable) VAT input tax at 15%. This VAT rate has been increased to 17.5% and may be subject to future changes, but for the purpose of this question the theory and workings remain the same irrespective of the rate.
12 Payables, other than trade payables, will comprise tax due, proposed dividends and VAT payable equal to one-quarter of the net amount due for the year.
13 Calculations are based on a year of 365 days.
Construct a forecast statement of comprehensive income for Esrever Ltd for the year ended 30 June 20X1 and a forecast statement of financial position at that date in as much detail as possible. (All calculations should be made to the nearest £1.)