Simon intends to start his own business selling specialist wines. Some of his sales will be for cash from a shop that he intends to rent. He also plans to sell some wine on credit to local restaurants and hotels. The details of his business plan are as follows: 1. He will rent a shop for £14,000 per annum payable quarterly in advance. The landlord also requires a deposit of £5,000 to be paid when the rental starts in June. 2. He will invest £13,000 from his own savings and his father will loan him £7,000. His father will charge interest at a rate of 2.5% per annum payable annually after an interest free period of 6 months. 3. Simon will purchase and pay for £13,000 of wine in June. Thereafter, to maintain the same level of inventory, he will purchase wine to replace what is sold. 4. Suppliers will allow one month's credit and credit customers will expect one month's credit. 5. Sales levels are predicted to be: Total sales Cash sales Credit sales June 6,000 3,000 3,000 July 6,500 3,000 3,500 August 7,000 3,000 4,000 September 8,000 3,500 4,500 October 9,500 4,500 5,000 November 12,000 5,000 7,000 6. Wine will be sold at a gross profit margin of 20%.

Simon intends to start his own business selling specialist wines. Some of his sales will be for cash from a shop that he intends to rent. He also plans to sell some wine on credit to local restaurants and hotels. The details of his business plan are as follows: 1. He will rent a shop for £14,000 per annum payable quarterly in advance. The landlord also requires a deposit of £5,000 to be paid when the rental starts in June. 2. He will invest £13,000 from his own savings and his father will loan him £7,000. His father will charge interest at a rate of 2.5% per annum payable annually after an interest free period of 6 months. 3. Simon will purchase and pay for £13,000 of wine in June. Thereafter, to maintain the same level of inventory, he will purchase wine to replace what is sold. 4. Suppliers will allow one month's credit and credit customers will expect one month's credit. 5. Sales levels are predicted to be: Total sales Cash sales Credit sales June 6,000 3,000 3,000 July 6,500 3,000 3,500 August 7,000 3,000 4,000 September 8,000 3,500 4,500 October 9,500 4,500 5,000 November 12,000 5,000 7,000 6. Wine will be sold at a gross profit margin of 20%.

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Description: Simon intends to start his own business selling specialist wines. Some of his saleswill be for cash from a shop that he intends to rent. He also plans to sell somewine on credit to local restaurants and hotels. The details of his business plan areas

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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