Accounting -Budget Completion Assignment

Sarah Smith is starting a business selling specialty sunglasses and has located a small shopataretailparkontheoutskirtsoftown.TheshopistobecalledSarahsSunnies.Sarahintendsto have the shop open for business on April 1, 2023. Sarah has been in business before, andherbusinessplan includes thefollowing data:

ProjectedSales

Itisestimatedthat60%ofsaleswillbeforcashwiththeremainderoncredit.Creditsaleswillbereceivedinthemonthafterthesale,infull.

Althoughthebusinesswillstockavarietyofsunglasses,theywillallsellforthesameamount,of$180perpairofglasses.

Purchases andInventories

ThesunglassesareimportedbyawholesalerinAucklandandeachmonthSarahwillpurchasesufficientsunglassestoensureaclosingbalanceofinventoryof10%ofthenextmonthssales.Theaveragepurchasepriceperpairofsunglassesis$80.00.Paymentwillbemadeonthe20^thofthemonthfollowingthepurchase.

Non-CurrentAssets

• Itisabusinesspolicytousethestraight-linemethodofdepreciationforallnon-current
• Thefurnitureandfittingsfortheshopcost$18,000andhaveanexpectedlifeof10yearswithnoresidual
• Theofficeequipmentcost$10,000anditisestimatedtheusefullifewillbethreeyearsafterwhichitsresidualvaluewillbe$1,000.

Other

• Sarah has employed a salesperson, Jason Jones to work part-time for $2,100 a month.Jasonispaidonthe20^thofeachmonthforthat(IgnorePAYEandotherdeductions).
• Generalcosts(includingutilities,telephone,stationery,ISPprovider)areestimatedat

$500amonth,paidonthe20^thofthemonthfollowing purchase.InMarch,Sarah incurred

$186 ofgeneralcostswhichareshown asan AccountsPayableas at31March2023.

• Therentonthebuildingis$700amonthandispaidquarterlyinadvanceandthefirstpaymentis dueon 1April 2023.
• Theannualinsurancepremiumfrom1April2023to31March2024is$1,800payableon3 May
• Sarahintendstospend$300amonthonadvertisinginlocalpapersandtheirtermsarethataccountsare paid inthemonththe advertisements
• Thebalanceofcashatbankon1Aprilis $10,000.
• Sarahintendstodraw$2,500outofthe businesseach month.

Required:

• 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 thepink (16marks)

• On the Sales, Purchases & NCA sheet, complete the Sales Collection budget andPurchasesbudgetandDepreciationforthequarter1Aprilto30June2023byenteringformulasinthe blue (34 marks)

• OntheCashFlowSheet,completetheCashFlowBudgetforeachofthethreemonthsApril,May,andJune,andthetotalsforthequarter1Aprilto30June2023byenteringformulasinthe bluecells anddescriptions(revenues orcosts)inthepink

(22marks)

• On the Income Statement Sheet, complete the Projected Income Statement for thequarterthatended30June2023byenteringformulasinthebluecellsanddescriptions(revenueorcosts)inthepinkAmonth-by-monthIncomeStatementisnotrequired. (13marks)

• Checktheflexibilityofyourworkbookbychangingthepurchasepriceofthesunglasseson the Data Sheet, from $80 to $70. Enter the resulting Net Profit and ending CashBalance in the pink boxes provided on the Income Statement Sheet. (Remember tochange the purchase price back to the original amount before submitting yourassignment)