diff_months: 16

Accounting -Budget Completion Assignment

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Added on: 2023-03-31 05:43:00
Order Code: 488054
Question Task Id: 0

Sarah Smith is starting a business selling specialty sunglasses and has located a small shop at a retail park on the outskirts of town. The shop is to be called Sarah’s Sunnies. Sarah intends to have the shop open for business on April 1, 2023. Sarah has been in business before, and her business plan includes the following data:

 Projected Sales











It is estimated that 60% of sales will be for cash with the remainder on credit. Credit sales will be received in the month after the sale, in full. 

Although the business will stock a variety of sunglasses, they will all sell for the same amount, of $180 per pair of glasses. 

Purchases and Inventories

The sunglasses are imported by a wholesaler in Auckland and each month Sarah will purchase sufficient sunglasses to ensure a closing balance of inventory of 10% of the next month’s sales. The average purchase price per pair of sunglasses is $80.00. Payment will be made on the 20th of the month following the purchase.

 Non-Current Assets

  • Itis a business policy to use the straight-line method of depreciation for all non-current 
  • Thefurniture and fittings for the shop cost $18,000 and have an expected life of 10 years with no residual 
  • Theoffice equipment cost $10,000 and it is estimated the useful life will be three years after which its residual value will be $1,000.


  • Sarah has employed a salesperson, Jason Jones to work part-time for $2,100 a month.Jason is paid on the 20th of each month for that  (Ignore PAYE and other deductions).
  • Generalcosts (including utilities, telephone, stationery, ISP provider ) are estimated at

$500 a month, paid on the 20th of the month following purchase. In March, Sarah incurred

$186 of general costs which are shown as an Accounts Payable as at 31 March 2023.

  • Therent on the building is $700 a month and is paid quarterly in advance and the first payment is due on 1 April 2023.
  • Theannual insurance premium from 1 April 2023 to 31 March 2024 is $1,800 payable on 3 May 
  • Sarahintends to spend $300 a month on advertising in local papers and their terms are that accounts are paid in the month the advertisements 
  • Thebalance of cash at bank on 1 April is $10,000.
  • Sarahintends to draw $2,500 out of the business each month.


  • On the Data Input sheet, enter the data as provided in the assessment brief. Somedata has been pre-entered. You are only required to complete the missing data in the pink  (16 marks)
  • On the Sales, Purchases & NCA sheet, complete the Sales Collection budget andPurchases budget and Depreciation for the quarter 1 April to 30 June 2023 by entering formulas in the blue  (34 marks)
  • Onthe Cash Flow Sheet, complete the Cash Flow Budget for each of the three months April, May, and June, and the totals for the quarter 1 April to 30 June 2023 by entering formulas in the blue cells and descriptions (revenues or costs) in the pink

(22 marks)

  • On the Income Statement Sheet, complete the Projected Income Statement for thequarter that ended 30 June 2023 by entering formulas in the blue cells and descriptions (revenue or costs) in the pink  A month-by-month Income Statement is not required. (13 marks)
  • Checkthe flexibility of your workbook by changing the purchase price of the sunglasses on the Data Sheet, from $80 to $70. Enter the resulting Net Profit and ending Cash Balance in the pink boxes provided on the Income Statement Sheet. (Remember to change the purchase price back to the original amount before submitting your assignment)
  • Uploaded By : Katthy Wills
  • Posted on : March 31st, 2023
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