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    Learning Aims C2 and C3 Exercise: Tasks

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    Jeff King started an electric bike manufacturing business called Boshington Bikes Ltd. He invested £60,000 in share capital along with taking out a £250,000 mortgage for business premises. Jeff sublets part of the premises to earn additional income. The business has patented battery systems and trademarked logos. Sales in the first six months were 5,000 bikes, generating revenue. Capital expenditures included patented technology, trademarks, and machinery purchases through leasing agreements. Revenue expenditures include component discounts, purchasing, maintenance, marketing, and digital presence costs.

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    Learning Aims C2 and C3 Exercise: Tasks

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    21 views2 pages
    Jeff King started an electric bike manufacturing business called Boshington Bikes Ltd. He invested £60,000 in share capital along with taking out a £250,000 mortgage for business premises. Jeff sublets part of the premises to earn additional income. The business has patented battery systems and trademarked logos. Sales in the first six months were 5,000 bikes, generating revenue. Capital expenditures included patented technology, trademarks, and machinery purchases through leasing agreements. Revenue expenditures include component discounts, purchasing, maintenance, marketing, and digital presence costs.

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    C2 and C3 exercise

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    Jeff King started an electric bike manufacturing business called Boshington Bikes Ltd. He invested £60,000 in share capital along with taking out a £250,000 mortgage for business premises. Jeff sublets part of the premises to earn additional income. The business has patented battery systems and trademarked logos. Sales in the first six months were 5,000 bikes, generating revenue. Capital expenditures included patented technology, trademarks, and machinery purchases through leasing agreements. Revenue expenditures include component discounts, purchasing, maintenance, marketing, and digital presence costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    21 views2 pages

    Learning Aims C2 and C3 Exercise: Tasks

    Uploaded by

    An
    Jeff King started an electric bike manufacturing business called Boshington Bikes Ltd. He invested £60,000 in share capital along with taking out a £250,000 mortgage for business premises. Jeff sublets part of the premises to earn additional income. The business has patented battery systems and trademarked logos. Sales in the first six months were 5,000 bikes, generating revenue. Capital expenditures included patented technology, trademarks, and machinery purchases through leasing agreements. Revenue expenditures include component discounts, purchasing, maintenance, marketing, and digital presence costs.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Learning aims C2 and C3 Exercise

    Scenario

    Boshington Bikes Ltd is a new start up business based in Bristol, manufacturing electric bicycles and owned
    by Jeff King. It is a private limited company but Jeff is the main shareholder; his wife having a 20% stake in
    the business. When Jeff set up the business, in addition to the £60,000 share capital he and his wife
    invested, he also took out a £250,000 mortgage on the business premises, using a loan of £20,000 from his
    father to convince the bank to lend him the money. He has agreed to pay this back to his Dad over 10 years
    at 2% interest.

    The premises are large and he now sublets one of the workshops to another small business, for which he
    earns £5000 per month.

    So far Jeff has fully equipped the factory with high technology machinery to make his uniquely designed
    electric bikes; the battery system has been patented. He has also gained a trademark for his logo and brand
    name. He has used five year leasing agreements to buy the machinery he needed to make the electric bikes.

    The bikes retail for an average price of £1800 and his sales in the first six months were 5,000. He uses a
    component supplier based in Birmingham, who was reluctant to negotiate on trade credit and discounts
    initially. However, given the large scale of sales in the first few months, has now agreed to a 5% discount on
    parts if payment is received within 30 days, 15% if payment made within 7days.

    He employs five workers in the factory and two office staff who deal with all the purchasing, invoicing and
    communication with their key account customers. The computer system they bought is very advanced, but
    Jeff is concerned that it will all need updating within three years.

    Jeff managed to gain contracts with two large cities to supply electric bikes so 50% of their sales are business
    to business. The remaining sales come from selling directly to customers making use of social media to
    market their range of bikes and their marketing budget has been focused largely on building a strong digital
    presence.

    Tasks

    1. Explain the term Capital Income [2]


    2. Explain the term Revenue income [2]
    3. In the table below, identify all the sources of capital and revenue income detailed in the
    scenario above. [6]

    Sources of capital income Sources of revenue income


    - leasing agreements to buy the machinery - bikes retail
    - supplying electric cars

    4. Explain the term Capital expenditure [2]


    5. Explain the term Revenue expenditure [2]
    6. In the table below, identify all the sources of capital and revenue expenditure detailed in the
    scenario above. [6]

    Sources of capital expenditure Sources of revenue expenditure


    - the battery system has been patented. - discount on parts
    - gained a trademark for his logo and brand - purchasing of parts
    name - maintenance of machinery
    - buying machinery - marketing budget
    - digital presence

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