The following actual balance sheet was prepared for Martin’s Musical Supplies Ltd as at 30 September 2017.

	Martin’s musIcal supplies Ltd Balance Sheet as at 30 September 2017
	Cash at bank Accounts receivable (net) Inventory Prepaid rent Furniture & equipment Accumulated depreciation Plant & machinery Accumulated depreciation		$ 11000 20000 32000 1600 40000 (20000) 64000   (48000)		Accounts payable Accrued wages Bank loan Share capital Retained earnings		$ 12000 1600 34000 40000 13000
			$100600				$100600

At 30 September, you are also provided with the following information:

1.  Sales forecasts available: October $39000, November $44000, December $48000.

2.  Cash sales account for 40% of sales. Credit sales are collected 30% in the month of sale, 50% in the following month and 20% in the second month following the sale.

3.  Purchases are expected to be made at the rate of 60% of expected sales for each month and are purchased on credit.

4.  Creditors are paid 40% in the month of purchase and 60% in the next month.

5.  Inventory is projected to be $37600 at 31 December 2017. 

6.  Rent on premises increased to $4950 per quarter from 1 August 2017. This is paid on the last day of the first month of each quarter.

7.  Wages of $12000 per month are normally paid as incurred, although December wages of $2000 are expected be outstanding at 31 December 2017 as a result of the normal payday being a week after the end of the year.

8.  The following are paid as incurred: electricity $600 per month, interest on loan $220 per month and cleaning contractor $400 per month. The loan principal is paid at the rate of $2000 per quarter.

9.  Depreciation is charged at 10% per annum on the cost of the furniture and equipment and 15% per annum on the cost of the plant and machinery.

10. A new machine will be purchased for cash on 31 December 2017 for $16000.

Required

A. Prepare a budgeted income statement for the quarter ended 31 December 2017.

B. Prepare a cash budget for the quarter ended 31 December 2017.

C. Prepare a budgeted balance sheet as at 31 December 2017.