CASH FLOW FORECASTS - THE NURSERY
Barry and Julie own a small nursery in Childwall, near to Liverpool Hope, University.
They rent a house, which has a nursery attached and offer a range of services to parents, such as after school care and holiday clubs. .
The following information is available:
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On 31st December of the previous year they had a credit balance in their account of £1,000.
They were owed £300 from credit sales at the end of the previous year.
There is an outstanding debt of £200 for food purchased in the previous year.
Rent on the premises in £4,000 per year- payable in equal instalments in January, April, July and December.
They forecast a quarterly electricity bill of £3200 to be paid in quarterly instalments in February, May, August and November.
They buy art, and other, materials costing £300 each month although payment is deferred for one month.
They draw out £800 per month for personal expenses
June forecasts their income from the nursery as follows:
a. January £400
b. February £400
c. March £600
d. Aril £1,000
e. May £1,500
f. June £3,000
g. July £3,000
h. August £3,000
i. September £1,500
j. October £1,000
k. November £500
l. December £800
Only 50% of this will be received in cash, the remainder involve a month’s delay in receipt of payment.
You are required to complete a cash flow forecast for the business for the forthcoming year.
Month
January February March
April
May
June
July
August
September October November December
Cash sales
Receipts
from
debtors
Total
Cash
Inflow
200
300
200
200
300
200
500
300
750
500
1500
750
1500
1500
1500
1500
750
1500
500
750
250
500
400
250
500
400
500
800
1250
2250
3000
3000
2250
1250
750
650
Materials
Rent
Electricity
Personal
drawings
Total cash
Outflow
200
1000
300
300
300
1000
300
300
300
1000
300
300
300
300
300
1000
Total
Cash
Inflow
Total
Cash
Outflow
Net Cash
flow
800
800
800
800
800
800
800
800
800
800
800
800
800
800
800
800
2000
1900
1100
2100
1900
1100
2100
1900
1100
1100
1900
2100
500
400
500
800
1250
2250
3000
3000
2250
1250
750
650
2000
1900
1100
2100
1300
1100
2100
1900
1100
1100
1300
2100
(1500)
(1500)
(600)
(1300)
(650)
1150
900
1100
1150
150
(1150)
(1450)
Cash B/F
1000
(500)
(2000)
(2600)
(3900)
(4550)
(3400)
(2500)
(1400)
(250)
(100)
(1250)
Cash C/F
(500)
(2000)
(2600)
(3900)
(4550)
(3400)
(2500)
(1400)
(250)
(100)
(1250)
(2700)