Mr Norman is going to set up a new business in Singapore on 1 January 20X8. He will invest $150,000 in the business on that date and has made the following estimates and policy decisions:

Required:

(a) A purchases budget for each of the first six months.

(b) A cash flow forecast for the first six months.

(c) A budgeted statement of comprehensive income for the first six months’ trading and a budgeted statement of financial position as at 30 June 20X8.

(d) Advise Mr Norman on the investment of any excess cash.

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Forecast sales (in units) made at a selling price of $50 per unit are: Month Sales units January 1,650 February 2,200 March 3,850 April 4,400 Month Sales units May 4,400 June 4,950 July 5,500 2 50% of sales are for cash. Credit terms are payment in the month following sale. 3 The units cost $40 each and the supplier is allowed one month's credit. 4 It is intended to hold inventory at the end of each month sufficient to cover 25% of the following month's sales. 5 Administration $8,000 and wages $17,000 are paid monthly as they arise. 6 On | January 20X8, the following payments will be made: $80,000 for a five-year lease of the busi- ness premises and $350 for insurance for the year. 7 Staff sales commission of 2% of sales will be paid in the month following sale.