|
| John
Mc Carthy, Letterkenny, Co. Donegal, proposes to go
into business as a self employed painter / decorator.
He has approached the bank for a loan to finance the
start-up of his business. The bank are interested in
supporting John but cannot / will not make a formal
approval until John submits a business plan with Projected
Profit & Loss Accounts for three years. |
| Your Task: |
To prepare a 3 Year projected Profit & Loss account
for John (years ended 31 December, 2007, 2008, 2009)
based on the information below that John provided. Please
use a spreadsheet (Microsoft Excel nó eile)
to complete the assignment
|
| Year 1 |
John estimates that his turnover / sales in Year
1 will be €95,000. No Grants available for this
sector. John will purchase paint to the value of €25,000
in the first year – he estimates that he will
have €5,000 of this paint in stock at end of
year 1 (31 December, 2007)
|
| Hint 1 |
No opening stock as this is a new business start-up. |
| Hint 2 |
The closing stock at the end of year 1 is the opening
stock for year 2. |
|
John
estimates that the expenses / overheads in year 1
will amount to the following:
| Insurance |
€1,500 |
| Light and Heat |
€3,500 |
| Motor & Travel Costs (diesel, for the van
etc) |
€4,100 |
| Telephone (per month) |
€100 |
| Stationery and Postage |
€510 |
| Miscellaneous |
€900 |
| Accountancy |
€2,000 |
| Bank Interest and Charges |
€2,100 |
| Advertising |
€1,000 |
| Rent (per week) |
€100 |
|
| John
intends to purchase a new Van at a cost of €25,000.
He estimates that the useful economic life of the Van
is 5 years. Include an amount for depreciation in each
of the 3 years of the Projected P & L Account (Straight
Line Basis). |
| Year 2 |
Increase Sales
by 10% on year 1 (i.e. Sales in year 2 are 10% greater
than Sales in Year 1)
Increase Purchases (Paint) by 10%. Closing Stock at
end of year 2 is €3,000 All overheads to be
increased by 10% except Insurance which is to be reduced
by 5% and Accountancy which will increase by 20%.
Hint - Depreciation will be the
same as year 1
|
| Year 3 |
Increase Sales
by 10% again (i.e. 10% increase on the Sales figure
in Year 2)
Increase Purchases (Paint) by 5% i.e 5% extra on Year
2). Closing Stock at end of year 3 is €4,000 All
overheads to be increased by a further 10% (again
10% extra on Year 2) except Insurance which is to
be the same as it was in Year 1 and Accountancy which
will increase by 20% on Year 2.
Please include a (simple) cover-page which John can
use when giving the Projected P & L to the bank
with your assignment
|
| Submission Deadline:
|
7th June at Gweedore
Residential |
| Recommended Reading: |
Micheal MacGiolla
Easpaig Lecture Notes
Selected Chapters of Recommended Texts |
