Preparation of accounts and Essay Example | Topics and Well Written Essays - 1000 words

Preparation of accounts and - Essay ExampleMoreover, the division has attracted a type of consumers that seem to be a niche market, thus creating stable demand for the productsCost of crude(a) sales has been assumed to follow a anatomy from its old performance. For the home decorating division, cost of sales was pegged at 70 percent, for the household goods at 60 percent, and for the DIY goods at 40 percent.Cost of operations for 2010 also followed the historical pattern based on 2009 and 2008 statements, and assumed the same percentage against gross sales of previous years. Given these assumptions, the gross operating income and the income before tax was derived and computed for the year 2010.Since it was assumed that there was no revaluation occurring in 2010, the scratch income after tax for Metropole was projected to be at 193,000. This income, compared to that of 2009 and 2008, is quite better than expected, given the bleak world(a) economic outlook.Since there is an expect ed economic slowdown, the forecast decreased in sales will direct a bigger inventory of merchandise. Thus compared to 2009, the inventory for 2010 will be higher by around 10 percent. Trade receivables, on the other hand, will suffer a bit since receivables may non be collected on time. As a matter of fact, to push sales and in an causal agent to curtail inventory from piling up, sales on account are projected to rise fine-looking more trade receivables to account for 2010. Thus, trade receivables account for 2010 ended with 80 percent higher than the previous year 2009.What will save the day for Metropole during the economic downturn in 2010 will be the super profitable and stable DIY stores. This division is expected to deliver the cash for the lodge. Thus, it is also forecast that an increase in cash account is expected, and some of them will be treated as short term nest egg deposit.Given the volatile nature of the economy, investments are forecast to be put on hold, as the company observes the direction