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Part One Below is the trail balance of Jack Smith (Sole trader) in respect of the year ending December 31st2020 was as follows. Additional information - Closing stock at 31 December 2020 was valued at 5200. - Depreciation for the year ended 31st December 2019 has not yet been provided, hence, vehicles as well as fixtures \& fittings need to be depreciated on a straight-line basis (assume in both cases that the accumulated depreciation represents the provision for one year). - Bad debts amounting to 260 are to be written off. - Wages prepaid are 710. - Sundry expenses accrued are 530. Requirements: 1. You are required to prepare an Income Statement for the year ended 31 st December 2020 and a Balance Sheet (Position Statement) as at that date. (20 marks) 2. You should conduct financial ratio analysis. Important ratios such profitability, efficiency, gearing and liquidity ratio. At least one ratio from each category. You are required to calculate five ratios and interpret them. (1 mark for the calculation each and two for good interpretation each). (15 marks) 3. You should provide a critical overall explanation and reflection of Jack's financial statement. (25 marks) Part Two Daniel supermarket is located in Nottingham city. He has problems with his cash flow. Every month he has expenses to pay such as equipment or staff wages. Below is the relevant information - At the start of January, Daniel receives an investment of 10,000 - Credit sales from sales took place in previous months to be received as follows: January 2,500 and subsequently 10,000 each month from February to June. - Daniel constructed shelves for the supermarket in January. The project materials cost 15,000 which will be paid at 3000 instalments starting from February. - The sub-contract labour for the project cost 24,000, which will be paid at 4,000 instalments starting from January. - Daniel signed a contract with a marketing agency for their services at a cost of 3,000 which will be paid at 500 monthly from January. - A refrigerator worth 5,000 was purchased. The supplier agreed that Daniel can pay twice. The first payment of 2,500 will be January and the second in April. - Daniel employed one full time worker, all year round, Daniel pays him 1,000 a month - Other monthly cost which includes two extra workers, he pays them 500 each. (Hint: Cash flow forecast covers from January to June) Requirements: 1. You are required to help Daniel manage his finance by completing his cash flow forecast for him. (20 marks) 2. Identify any problems in Daniel's cash flow forecasts and suggest actions that he could take to avoid the problems? (20 marks)

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