Reference no: EM132648284

A Lee Quinn has $150 000 which she intends to use to fund a new business. The  business will commence on 1 December 2008 and expenditure on that date is expected to be as follows.

$

Land and buildings 70,000

Motor vehicle 20,000

Fixtures and fittings 18,000

The remaining cash will be deposited in the business bank account.

During the first year of business, Lee anticipates the following:

Sales $220 000 of which 15 % will be on credit

Gross profit as a percentage of sales 45 %

Discount allowed 2 % of total sales

Discount received 2 % of total purchases

Wages and salaries 9 % of total sales

Depreciation on motor vehicles 40 % reducing balance

Depreciation on fixtures and fittings 20 % on cost

Bad debts 3 % of credit sales

Sundry expenses 5 % of total sales

Drawings $10 000 plus 10 % of net profit

At 30 November 2009, projected balances are:

$

Stock 19,500

Debtors 12,000

Creditors 11,000

Bank ?

No outstanding accruals or prepayments are anticipated at 30 November 2009.

REQUIRED

Question (a) For the year ending 30 November 2009, calculate:

(i) total receipts from debtors;

(ii) total purchases, all of which will be on credit;

(iii) total payments to creditors.

Question (b) (i) Prepare projected trading and profit and loss account for the year ending 30 November 2009.