Freewheels LTD is in the process of preparing its master budget for the six months ending December 19X2. The balance sheet for the year ended 30 June 19X2 is estimated to be as follows:

You are given the following information.

a) The selling price in may 19X2 was 6 per unit and this is to be increased 8 per unit in October 50% of sales are for cash and 50% on credit to be paid two months later.

b) Purchases are to be paid for two months after purchase.

c) Wages and salaries are to be paid 75% in the month incurred and 25% in the following month.

d) Overheads are to be paid in the month after they are incurred

e) The fixes assets to be paid for in three equal instalments in the three months following purchase

f) Dividends are to be paid three months after they are declared and the receipts from the share issue are budgeted to be received in the month of issue

g) Fixed assets are depreciated 10% per annum on a straight line basis on those assets owned at 31 December 19X2

h) Closing stock at the beginning of the period under review was equal to the previous two months purchases.At 31 December 19X2 it was equal to three months purchases.

Required: Prepare the following budgets for the six months ended 31 December 19X2.

1) Cash budget 2) Budgeted profit and loss account 3) Budgeted balance sheet.

THE REMAINING INFORMATION WILL BE THE NEXT QUESTION BECAUSE QUESTION IS TOO BIG.