Accounts and Finance
Step 5 Preparing Projections and Budgets

First of all,we need to make Projected Profit and loss as figures of Balance Sheet are linked to Profit and loss



Fixed Assets - For Dep Chart (Closing Value After Dep)

Loan - Interest Expense Chart (Loan Chart-Closing Value)

Fd  -From Interest Income Chart

Stock - P & L (Closing Stock)

Debtors - On Basic Of Sales

Creditors for Purchases -On Basis of Purchase

Creditors for Expenses -On Basis of Different Indirect expenses

Capital - Normal Same(if not to be introduced further)

Reserve Of Surplus Or P & L A/C -Last Year B/S + Curent Pat

Prepaid Exp - Normally Reduced

Advance From Customer - On Basis Of Sales

Advance From Supplier - On Basis Of Purchase

Expenses Payable
A) Salary Payable - On Basis Of Salary
B) Freight Payable - On Basis Of Freight

Provision For Tax - From P & L Tax

Vat Payable - On Basis Of Sale

Vat Receivable - On Basis Of Purchase

Rent Deposit - Normally Same (if new office/factory to be rented ,may be different)

Advance Salary -If onetime,then Nil,if recurring,then on basis of Salary



Prepare projected P&L and Balance Sheet on the basis of following assumptions
Prepare working note for loan interest , Fd Interest and Depriciation

Year 1
Sales Double
Existing Loan Repaid In 5 Yrs(In 5 Equal Principal Instalments+Interest),installment paid in the beginning of the next year
Assume 15% Inflation

Year 2
Sale 40% Increase As Compared To Projected Year
Machine To Be Installed For Rs 2000
Installation Charges Of Rs 500
Machine Will Be Installed After 5 Months (By 30 Aug)
Loan To Be Taken From Pnb @ 10% Of 1500 (60% Of Cost Of Project) (Repayble In 3 Years)
Fd To Be Broken After 3 Months(By 30 June)
Capital Increase By 500
Balance From Cash & Bank
Assume 15% Inflation
Assume Depreciation Rate on Machine is 15%

How to Make Projected Balance Sheets - Making Projected Balance Sheets

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.