QUESTION 2 Master budget & responsibility accounting

The management accountant, with assistance from the production and sales managers, has obtained the following estimated information about George’s Fishes (a shop selling exotic pet fish and fish supplies) in order to prepare the budgeted income statement for July 2020:

i. Estimated sales for July- August:

Sales are 80% cash sales. Credit sales are collected in the month following sale.

ii. Opening inventories were:

Desired ending inventories are 30% of next month’s sales (in units).

In any month an estimated 10% of opening live stock dies before being sold due to the poor condition of some fish arriving from the supplier. Inventory loss is written off as part of cost of goods sold by inclusion in purchases i.e. additional purchases are necessary to replace the dead stock. Purchases are paid for the month following purchase.

iii. Operating expenses budgeted for July are:

The supplies used were part of supplies purchased for cash in June 2020. All other expenses are paid as incurred.

iv. Accounts receivable as at 30th June 2020 were $9,100

v. Accounts payable as at 30th June 2020 were $40,945

vi. The cash at bank balance at 30th June 2020 was $6,000

Required

a) Prepare a sales budget for July.

b) Prepare a purchases budget for July.

c) Prepare a budgeted income statement for July.

d) Prepare a cash budget for July.

Round all amounts to nearest whole number. Ignore GST.