Fantastic Shirt Limited is a wholesaler selling high$-$quality shirts to its local retailers and started

its business on April $1,2023.$ The company purchases shirts directly from several

manufacturers at a cost of $$80$ each. It then sells the products to the local retailers with $75\%$

markup on cost for the first three months in order to gain the market shares. After a three$-$

month operation, the management of the company decides to prepare a budget for the next six

months of the year and estimates the following transactions for July to December $2023.$

The forecast purchases and sales made by the management are as follows:

The management expected that the shirt manufacturers will increase the price of its

product by $25\%$ effective from July $2023.$

Starting from July $2023,$ the company expects to set the price of shirts to all local

retailers with a $100\%$ markup on the new cost expected from the manufacturers.

The company's repayment schedule for purchases of shirts from the manufacturer is

$60\%$ cash upfront in the month incurred and the balance will be paid in the following

month.

The credit term offered by the company, according to the past history and current

payment terms, to the local retailers is $75\%$ payable in the month of sales and the

balance will be settled in the following second month.

The company currently uses FIFO to account for its inventory.

Monthly salary of $$120,000$ is payable to staffs at end of each month. Also, the

company offers a $5\%$ commission to its staffs based upon the monthly sales basis and

is payable in the following month.

The monthly operating expenses are estimated at a rate of $15\%$ on the monthly sales,

payable in the following month. Besides, annual rates of $$120,000$ is payable quarterly

in January, April, July and October every year.

Monthly office rent of $$200,000$ is payable when it is incurred. In addition,

warehousing expenses, based upon the ending inventory stored at the end of each month,

are charged at a rate of $$10$ per unit, payable in the following month.

The company purchased office equipment on April $1$ at cost $$300,000.$ The expected

useful life of these fixed assets is $10$ years with a scarp value of $$50,000.$ The company

uses straight$-$line method to account for these fixed assets. Moreover, the supplier of

the office equipment offered the company a payment term of net $150$ days.

The management plans to install computer systems in September at cost $$150,000$ with

a useful life of $5$ years and zero residual value. Besides, for tax purpose, the

management expects to write$-$off this computer system fully as depreciation at the end

of the year.

The ending cash balance as at June $30,2023$ is $$343,000.$

Required:

$($a$)$ Determine the amount of the ending inventory as at June $30,2023$ and December $31,$

$($b$)$ Prepare the Sales Budget and the Purchases Budget of the company with monthly

columns for the period of July to December $2023.$

$($c$)$ Prepare a Cash Budget with monthly columns for the period July to December $2023.$

Comment the result of the Cash Budget and provide one suggestion to it$.(30$ marks$)$

$($d$)$ Determine the current ratio of the company as at December $31,2023.($Show all

working$)$