Q3

A newly formed company supply electronic products to higher educational institutions across the country. The company has approached it Bankers to provide funding for the 2023 operations and a three-month master budget has been requested for review by the bankers.

You have been approached by the management as a consultant to prepare the first quarter budget for the bankers consideration for the operation in 2023.

End of Accounting Year December 2022

GH000Debtors 23,000Bank balance55,000Non-current assets at cost698,000Provision for depreciation balance98,000Creditors balance48,000Operating expenses for the month of December60,000Sales for the month of December400,000December ending inventory20,000Retained earnings120,000

The following additional information was also provided to assist your work.

1. Depreciation is provided at the rate of 5% on cost of non-current assets
2. Closing inventory is expected to increase by GH2,000,000 in January from December levels. This is expected to increase by the same figure in February from the projected figure in January. It is expected that in March closing inventory is desired to be GH26,000,000.
3. The company makes a profit of 25% on its sales.
4. Operating expenses is expected to increase by 10% from that of December and this is projected to increase at the same growth rate to March.
5. Sales is projected to grow by 15% from December until March.
6. The debtors figure is desired to be proportional to the sales values.
7. Creditors value for the three months are expected to be as follows: January - GH50,000,000; February - GH46,000,000 and in March - GH52,000,000.

You are required as a consultant for the company to prepare for their bankers:

1. The budgeted statement of profit or loss for the three months
2. The budgeted statement of financial position for the three months
3. The cash budget for the three months