(Solved by Humans)-After you had completed the budgeted income statementfor Sonique
Question
After you had completed the budgeted income statementfor Sonique Products AS for 2016,you continued to workwith a cash-flow budget and a budgeted balance sheet.
You gatheredadditional information regardingthebudgeted costs,which could berelevantfor the cash-flow predictions:
| Cost of sales | Suppliers of directmaterialarepaid on averageafter30days. |
| Salaries and otherpersonnel costs | The budget figures include 12.0%holiday pay and 14.1%employer'scontribution to thesocial securitysystem,which is calculated on top of salaries and holiday pay. The salaries arepaid in thesamemonth as it is takento cost. Accruedholiday pay for 2016will bepaid in 2017. Social securitycosts arepaid bi-monthly, in Januaryfor Novemberand December(opening balance 1.1.2016),in Marchfor Januaryand February,in Mayfor Marchand April, in July for Mayand June,in Septemberfor July and August and in Novemberfor Septemberand October. |
| Rent | Paid quarterlyin advance,in thebeginning of eachquarter. |
| Electricity | Paid on averageafter30days,themonthly budget is 1/12of annual budget. |
| Telephone and data lines | Paid on averageafter30days,themonthly budget is 1/12of annual budget. |
| Company car costs | Paid on averageafter30days,themonthly budget is 1/12of annual budget. |
| Travels | Paid thesamemonth that thecosts occur,themonthly budget is 1/12of theannual budget. |
| Agent commission | Paid on averageafter30days,themonthly budget is 1/12of annual budget. |
| Otheroperating costs | Paid on averageafter30days,themonthly budget is 1/12of annual budget. |
| Financial revenues | Deposited on thecompany's bank account 31.12.2016 |
| Financial costs | Deducted fromthecompany's bank account in four equal portions in March,June,September and December |
Value added tax (VAT) is reportedand paid six timesperyear:
In Februaryfor Novemberand December(opening balance 1.1.2016) In April for Januaryand February
In June for Marchand April
In August for Mayand June
In Octoberfor July and August
In Decemberfor Septemberand October
Itis thedateof invoicing and not thedateof paymentthat determinesin which termtheVAT is reported.Youmayuse 25%VAT in your calculations.
The output VAT is calculated based on thecompany's sales income.Becausehalf of thecompany's sales is exportsales,wheretheoutput VAT rateis 0%,the25%output VAT rateis only relevantfor half of themonthly sales.
Pertaining to incoming VAT to bededucted, thereis a 25%VAT on directmaterialcosts,rent, electricity,telephone/data line costs and otheroperational costs.TheVAT on company carsis not deductible and is thereforeincluded in thebudget figures.
You also gatheredadditional information that could berelevantfor thebudgeted balance sheet:
| Intangible assets | Capitalized costs for patented designs, depreciatedwith 40000in 2016. |
| Land | Notsubject to wearand tear,no depreciation |
| Buildings | Nocapitalized investments,depreciatedwith 320000in 2016 |
| Machines | Nopurchases/sales, depreciatedwith 187000in 2016 |
| Company cars | Nopurchases/sales, depreciatedwith 56000in 2016 |
| Inventory | Consists per31.12.2016of inventory of components with samebook value as per1.1.2016. |
| Accounts Receivable | Of theopening balance per1.1.20164200000is paid in Januaryand 2000000in February. Customers pay after45days in averagein 2016,no budgeted creditlosses |
| Othershort-termclaims | Is reducedto 300000in December2016. |
| Bankdeposits | Of theopening balance 1.1.2016is 450000a deposit of employees'withheld taxeson a separate bank account, locked for paymentof normal expensesand 150000a rentdeposit on a separateaccount to serveas collateral for rentagreement.Youmayassume that totally 600000of thebank deposits havesuch paymentrestrictions also attheend of 2016. |
| Equity | 75%of theprofit to retainedearnings,25%to payable taxes. |
| Mortgageloans | Paid backgradually with four installments of 50000eachin February,May,august and November. |
| Otherlong-term liabilities | Paid backwith two installments of 100000eachin April and October |
| Accounts Payable | Opening balance 1.1.20164998000is paid in Januaryand 1000000in February. |
| Payablesocial security | Opening balance 1.1.2016paid in January,seeinformation below. |
| PayableVAT | Opening balance 1.1.2016paid in February,seeinformation below. |
| Payableholiday pay | Opening balance 1.1.2016is paid in June 2016.Holidaypay accruedin 2016to bepaid in 2017. |
| Payablecorporatetax | Opening balance 1.1.2016is paid in November2016,and an accrual of 25%of theaccumulated profit is madeattheend of theyear. |
| Othershort-termliabilities | Will bereducedto 400000in December2016 |
a)??????? Present the calculations of the six bi-monthly VAT-terms, showing output, input VAT and payable amount for each term.
b)??????? Present a monthly cash-flow budget for 2016.Youmayuse a simple reporting format, starting with the opening balance of the relevant bank deposit accounts and it is not necessary to split the cash flows in operational, investing and financing activities. Here you may also split your reporting in two parts, one for January-June and the other for July-December.
c)???????? Present the expected balance sheetper31.12.2016.
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