Corellian Engineering would like you to prepare a cash flow forecast for the 3 months ended 31st March 2018.       Jan-18   Feb-18   Mar-18  
  They have provided you with the following information:   Receipts              
                          Sales Cash      
  1) The forecast bank balance as at 1st Jan 2018 is                Credit      
  2) Forecast Sales:   Dec-17 43000               Total Receipts        
        Jan-18 64000                              
        Feb-18 84000               Payments              
        Mar-18 53000               Purchases Cash      
        Apr-18 76000                 Credit      
  Percentage of sales received in the same month: 25%               Rent      
  Percentage of sales received in the next month: 75%               Wages      
                            New Machinery      
  3) Forecast purchases: Dec-17 38000                        
        Jan-18 56900               Total Payments        
        Feb-18 73500                              
        Mar-18 44000               Net Cash Flow        
        Apr-18 61500               Opening Balance        
                          Closing Balance        
  Percentage of purchases paid in the same month: 40%            
  Percentage of purchases paid one month in arrears: 60%             What is the main cause of the company's overdraft?                                                                           2 marks  
  4) Forecast expenses: Dec-17 5300                  
        Jan-18 6000              
        Feb-18 7400               Give two ways in which the company could avoid having to use their overdraft:                    2 marks  
        Mar-18 8200                
        Apr-18 6400                
  5) The business will dispose of machinery ("disposal"). They will receive in February 2018      
  and then in March 2018.                 List 3 reasons why producing a cash flow is good for the business:                                               6 marks  
  6) The business will buy new machinery in January 2018 costing £65,000              
  7) The business will pay rent one month in advance:                
        Dec-17 2300                  
        Jan-18 3200              
        Feb-18 1800              
        Mar-18 3400                
        Apr-18 4100              
                          Your score:  
  8) The business pays wages one month in arrears:               Estimated Score:  
        Dec-17 55000              
        Jan-18 60000              
        Feb-18 53000              
        Mar-18 65000              
        Apr-18 50000