Helena’s Chocolates is preparing a sales budget for the quarter (3 months) April–June 202X for their gift chocolate box product and a schedule of cash collections. The majority of their sales are cash via their retail shop (80%), but they also supply chocolate boxes to hotels (20% of their sales) on credit. Credit customers (accounts receivable) may claim a 5% discount if they pay within the month of sale.

Accounts receivable at 31st March were $64 000. In the past, 10 per cent of credit customers have been able to claim the discount, with the remainder paying in the month following sale.

Sales in units for April-July 202X are estimated as 60 000, 70 000, 80 000 and 80 000 chocolate boxes. The selling price per box is $6.

Boxes of chocolates are purchased for $2.50 and Helena’s has a policy of keeping sufficient ending inventory for 60 per cent of the following month’s sales in units. Purchases are paid for in the month following purchase. Accounts payable for chocolate boxes were $170 000 on 31st March.

Required:

a Prepare the sales budget for the boxes of chocolate, including estimated cash receipts for April–June 202X. Show each month separately and a total for the quarter. (Hint: split the sales between cash and credit; then for the credit sales spit the sales between those able to claim the settlement discount, and those who receive no discount).

b Prepare a purchases budget for the boxes of chocolate (in units and then dollars), and a schedule of cash payments for purchases.