Management of Staples Pty Ltd has been provided you with the following information for the period 1 April - 31 July 2016 in order to prepare a budgeted Income Statement and Cash Budget. Following a meeting with management and the business owners, the following budget milestones have been established. Accounts Balances 1 April $ $ Cash at Bank 6,000 Inventories 21,800 Accounts Receivable (net) 12,000 Prepaid Rent 1,000 Furniture & Equipment 27,000 Accumulated Depreciation - Furniture & Equipment 4,600 Plant & Machinery 54,000 Accumulated Depreciation - Plant & Machinery 22,400 Accounts Payable 7,000 Accrued Wages 1,200 Bank Loan 48,000 Share Capital 30,000 Retained Earnings 8,600 Totals $121,800 $121,800 Budgeted Sales: April 25,000 May 27,000 June 20,000 July 23,500 Cash Sales account for 50% of sales. Credit sales are collected 40% in the month of sale and 60% in the following month. Purchases are expected to be made at the rate of 55% of expected sales for each month and are purchased on credit. The company requires the monthly ending inventory balance to be $20,000 plus 25% of the next month's purchases. Creditors are paid 20% in the month of purchase and 80% in the next month. Dividends are paid by the business at the rate of $4,000 per quarter. Rent on-premises is $3,000 per quarter, paid on the last day of the first month of each quarter. Wages are normally paid as incurred and this will occur in the quarter ended 30 June. In the quarter ended 31 March, payday fell on 25th March so 6 days wages were outstanding at 31 March and are yet to be paid. Wages are normally incurred at the rate of $5,000 per month. The following are paid as incurred: electricity $400 per month, interest on loan $180 per month, and cleaning contractor $200 per month. The loan principal is paid at the rate of $2,000 per quarter. Depreciation is charged at 10% per annum on the cost of the furniture and equipment and 15% per annum on the cost of the plant and machinery. New machinery will be purchased for cash on 30th June for $10,000 

Requirements: Create the schedules required to create: 

a. A Budgeted Income Statement 

b. A Cash Budget Determine where the business is sensitive to changes in input data and develop appropriate KPIs. Produce a Word document as a budget report and in that document include A brief explanation for the KPI's chosen (item B above) including an explanation of how negotiations would be conducted with stakeholders on agreeing to the use of these KPIs as their performance measurement criteria.

 Task 2 In a word document answer the following budgeting theory questions. Explain what is meant by the term budget, and explain the key principles of budgetary control You are employed by a white goods distributor and have been asked to prepare a list of controllable and uncontrollable factors that might affect the sales of refrigerators in the coming year. Supply a list for the next management meeting. APPENDIX EXTRACT - POLICIES & PROCEDURES Procedure for Financial Administration and Budgeting Policy Staples Pty Ltd has implemented this policy to ensure that financial administration is completed in accordance with legal, ethical, and accounting requirements. Processing of financial transactions All Employees must ensure financial transactions are recorded accurately and timely. Confidentiality Employees should perform their duties with honesty and integrity. Financial Reporting Financial statements should be prepared in accordance with the Australian Accounting Standards AASB101. Accrual basis All transactions should be prepared on an accruals basis and are based on historical costs. GST Staples Pty Ltd. is registered for GST and therefore must account for GST in all applicable transactions and on Financial Statements. Budgets The budget process will include consultation and communication with managers from all departments. Forecasting techniques will include internal/controllable factors and external /uncontrollable factors. Budgets will be monitored weekly to identify all Key Performance Indicators. Budget control will compare accurate results with budgeted figures. Errors and Omissions All errors and omissions detected in financial reports must be referred to the company accountant or immediate supervisor before any corrections are attempted.