[Question 1] Sammy Ltd is preparing its budget for 2014. The Management Accountant has accumulated the following information: i) Sales (units) November (actual) 2 500 December (actual) 2 200 January (budgeted) 2 100 February (budgeted) 2 400 March (budgeted) 3.000 2 800 ii) iii) iv) April (budgeted) All units are sold at a price of $40 Sales are made on the following basis: 30% cash 45% % collected in the month following sale 20% collected in the second month following sale 5% uncollectible Monthly purchases are scheduled so that finished goods inventory at the end of any month are sufficient to meet 15% of the expected sales for the following month. Cost of sales is 55%. Purchases are made on a cash basis. Wages and other expenses are $36 000 monthly. This includes $3 000 monthly depreciation expense. v) Employees receive a bonus of 5% on sales in excess of $75 000 vi) The business plans to acquire new equipment in February. The equipment is expected to cost $60 000 and which is to be paid in three equal monthly installments, commencing in March. 3 Required: (6 marks) a) Prepare a sales budget for the five-month period ending March, 2014. b) Prepare a cash collection schedule for the period January to March, 2014 c) Prepare a purchases budget for the period January to March, 2014 (5 marks) (8 marks) d) Prepare a cash budget for the period January to March, 2014 (6 marks)