The directors of Greenfields Ltd have prepared functional budgets for the four months ending 30 April 2005. To discover the effect that the budgets will have on the company at the end of the four months, they require the accountant to prepare master budgets. The accountant is provided with the following data.

Further information 

1. Sales and purchases for the four months from January to April 2005 are budgeted to be:

2. 40% of sales are to cash customers; one month's credit is allowed on the remainder. 

3. The company pays for its purchases in the month following purchase. 

4. Selling and distribution expenses amount to 10% of sales and are paid in the month in which they are incurred.

5. Administration expenses amount to $20 000 per month and are paid in the month in which they are incurred. 

6. Stock at the 30 April 2005 is estimated to be valued at $22 500. 

7. Additional plant and machinery costing $60 000 will be purchased on 1 March 2005. 

8. Annual depreciation of fixed assets is based on cost as follows: Freehold premises 3%; plant and machinery 20%. 50% of all depreciation is to be charged to selling and distribution expenses, and the balance to administration expenses. 

9. Debenture interest is payable half-yearly on 30 June and 31 December. 

10. A dividend of $0.10 per share will be paid on the ordinary shares on 30 April 2005. 

11. $25 000 will be transferred to the General Reserve on 30 April 2005.

Required 

(a) Prepare a cash budget for each of the four months from January 2005 to 30 April 2005. 

(b) Prepare a budgeted Profit and Loss Account for the four months ending 30 April 2005 in as much detail as possible. 

(c) Prepare a budgeted Balance Sheet as at 30 April 2005 in as much detail as possible.

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Greenfields Ltd Balance Sheet at 31 December 2004 Fixed assets Cost Depreciation $ $ 50 000 10 000 22 500 32 500 Freehold premises Plant and machinery Current assets Stock Trade debtors Balance at bank Current liabilities Trade creditors Long-term liability 12% debentures 2009/10 Share capital and reserves Ordinary shares of $1 General reserve Retained profit 37 500 87 500 30 000 42 500 20 750 93 250 22 500 Net $ Maa 40 000 15 000 55 000 70 750 125 750 25 000 16 290d3 sonia to 100 750 SM 65 000 30 000 5 750 100 750