Prue Williamson Marketing Services is preparing a budget for the quarter year ended 31 December 2020. The information available for the budget is as follows.

1. Prue’s hourly charge-out rate for the year ended 30 September 2020 was $160 but she intends to increase this by 5% for the budget period. Prue also employs Win Kee, a newly graduated marketing student, and charges his work out at $80 per hour and does not intend to increase this for the next year.

2. Prue estimates that the following hours will be billed to clients for the quarter.

3. The services are all provided on credit and are collected as: 60% in the same quarter and 40%
in the following quarter.
4. The monthly expenses for the year ended 30 September 2020 are provided below, with Prue’s estimates of how they will change for the budget period.

5. Insurance is paid annually in October. Rent is paid 1 month in advance and electricity and telephone expenses are paid in the month after they are incurred. All other expenses are paid in the month they occur.
6. Prue intends to buy new office furniture at the end of December for $5200.
7. The balance sheet as at 1 October 2020 has the following account balances.

Required

(a) Prepare a budgeted income statement, a cash budget and a budgeted balance sheet for the quarter ending 31 December 2020.

Transcribed Image Text:

Prue 500 hours Win Kee 400 hours