Jan Sandwich is a wholesaler to the hospitality industry. Her business supplies gourmet lunch items to cafes in her local district. She operates as a sole trader under the name Lunchbox.

Most sales are cash; credit is offered to two long-term customers only. Suppliers have all extended credit to Lunchbox.

Lunchbox is not registered for GST.

Lunchbox
Balance Sheet as at 31 March
Current Assets
Accounts Receivable		$1800
Cash at Bank		$10000
Inventory		$700	$12500
Non-Current Assets
Plant and Equipment (at cost)	$40000
Accumulated Depreciation on Plant and Equipment	$12000	$28000
Office Equipment (at cost)	$25000
Accumulated Depreciation on Office Equipment	$11000	$14000	$42000
Total Assets			$54500
Current Liabilities
Accounts Payable		$2728
Non-Current Liabilities
5% Loan (due in 2 years)		$15000
Total Liabilities			$17728
Net Assets			$36772
Proprietors Equity
Capital			$22000
Accumulated Profits			$14772
			$36772

Additional Info

Sales (in $)
Actual
	January	5500
	February	5600
	March	5650
Forecast
	April	5820
	May	5900
	June	6100
	July	6200

• Total Sales comprise 80% cash sales and 20% credit sales.
• Invoices for credit sales are sent on the last day of the month of sale.
• Experience reveals the following pattern of debtors' collections: 50% pay within one month of invoice date, 40% pay in the second month after sale, 10% pay in the third month after invoice date.

Purchase Inventory:

• Closing inventory for each should represent 20% of the next month's sales in units (i.e. 20% of the next month's COGS).
• The averge markup on cost is 70%
• All purchases are on credit and are paid in the month following the purchase.
• Other Revenue: Interest received each month averages $10.00

Operating expenses (all cash except Depreciation)

• Administration costs (excluding depreciation and rates) represent 12% of each month's purchases and are paid in the month in which they are incurred.
• Depreciation is charged to the accounts at the rate of: Plant and equipment (marketing expense) 15% per year on cost, Office equipment 10% per year on cost.
• Marketing costs represent 6% of each month's sales and are paid in the month in which they occurred.
• Loan interest is paid at the end of each month at the rate of 5% per year. (The loan is an interest only loan with the principal due in 2 years).
• Rent (commercial) 0f $600 is paid at the beginning of each month.

1. Prepare month-by-month budgets for the three months ending 30 June:

• Sales Budget
• Purchases Budget
• Cost of Goods Sold Budget
• Expenses Budget
• Cash Receipts Budget
• Cash Payments Budget
• Casg Budget

1. Prepare the following repors:

• Income Statement for the quarter.
• Balance Sheet as at 30 June.

Sales Budget:

			April	May	June	Quarter
Total Sales
Cash Sales
Credit Sales

Purchases Budget:

	April	May	June	Quarter
Cost of Sales for the month
Add ending inventories
Goods Available
Less Opening inventories
Total Purchases

Cost of Goods Sold Budget:

	April	May	June	Quarter
Opening Stock
Add Purchases
Goods Available
Less Closing Stock
Cost of Goods Sold

Interest Revenue Budget:

	April	May	June	Quarter
Interest

Expenses Budget:

	April	May	June	Quarter
Marketing
Administration Expenses
Financial Expenses
TOTAL EXPENSES

Cash Receipts Budget:

	April	May	June	Quarter
Month 1
Month 2
Month 3
Cash Sales
Interest revenue
Total Cash Receipts
Accounts Receivable (opening)
Accounts Receivable (ending)

Cash Payments Budget:

	April	May	June	Quarter
Accounts Payable
Marketing and Distribution Exps
Administration Expenses
Rent
Loan interest
Total Cash Payments
Accounts Payable (opening)
Accounts Payable (ending)

Cash Budget:

	April	May	June
Opening Balance
Add Cash Receipts
Cash Available
Less Cash Payments
Closing Bank Balance

Answer rating: 100% (QA)

ANSWER Lets break down each budget and report step by step Sales Budget Month Total Sales Cash Sales Credit Sales April 5820 4656 1164 May 5900 4720 1... View the full answer