John intends to start up a small business in stationery by incorporating a company. He has a savings of Rs5,000 at bank. He plans to approach his bank for any necessary additional finance. He provides the following forecast information for year 2024. (a) He will purchase a car for Rs15,500 in the beginning of March. All vehicles are expected to have a five-year useful life. (b) The budgeted sales and purchases of spare parts for the following four months will be as follows: January February March April Rs Rs Rs Rs Sales 71,000 82,500 89,000 99,800 Purchases 34,000 39,800 48,000 53,400 (c) 50% of sales are expected to be paid for by cash. The remaining 50% sales are expected to be paid equally in the following two months. A 5% discount shall be allowed on the cash payment. (d) 30% of the purchases are expected to be paid for in the month of purchase. 40% of the purchases are expected to be paid in the month after purchase. The remainder will be paid for two months after purchase. A 4% discount shall be received on payment in the same month. (e) Variable overheads are budgeted at Rs6,500 monthly, from January, and are expected to increase by 5% each month. Such overheads are expected to be paid in full in the month in which they occur. (f) Depreciation on existing personal assets is expected to be Rs100 each month and cleaning expenses are expected to be Rs250 per month. Page 3 of 7 (g) In March, John will acquire a small delivery van for Rs19,000 and will pay 40% of the cost in same month. The remainder will be paid in equal instalments over the following ten months together with simple interest at 10% p.a. Interest shall be charged as from month of acquisition. (h) John will make drawings of Rs6,000 each month, together with an additional Rs3,000 in March. (i) John will rent another shop starting February at Rs6,000 per month. (j) He expects to pay Rs6,500 as wages every month. (k) He expects to pay for advertising for a total of Rs5,500 in March and Rs6,500 in April. (l)The closing bank balance in January 2024 is expected to be Rs25,900