Reference no: EM133070179
Question - Trudi Baxter, and her twin sister Kelly, are about to go into business as Positivtok, a company specialising in delivering motivational seminars to management trainees. Details of their first three months of budgeted activity is as follows Investment - Trudi and Kelly will each buy £10,000 of 25p ordinary shares on 1st June 2022.
Revenue - they will work for three clients, who will each have a monthly seminar. The fee per seminar is £2,000 and the agreed payment terms were as follows:
Fife Local Authority would pay in cash.
The Scottish Television Centre would pay one month after the seminar has taken place.
Hearts FC would pay three months after the seminar has taken place.
Expenses - The twins will pay £8,000, on 1st June 2022, for training equipment which they anticipate will last them for four years.
For the first two months, the seminars will be held in Trudi's flat, but on1st August 2022, the company will pay £12,000 for the annual rental of facilities at a local conference centre.
Sundry other cash expenses of £1,000 will be paid each month.
Tax - they will provide for corporation tax of £3,000 for the three month period 1st June - 31st August 2022.
Dividends - the twins will pay themselves a dividend of 8p per share on 28th August 2022
Required - What retained profit will Positivtok make in the three month period 1st June - 31st August 2022?
A. £4,100
B. £600
C. £13,500
D. £7,100
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