Question 3 (9 marks)

Part (a) (4 marks)

Lisa's Loaves produces homemade quality bread which currently sell for $5 a loaf. The entity has developed its web page and is trying to expand customer reach to this form of medium. Sales in units for each quarter of 2019 were as follows:

Quarter Ending	Units
31 March	15,000
30 June	20,000
30 September	17,500
31 December	30,000

Due to the change in sales strategy and other operating conditions, Lisa expects the following changes to sales for 2020:

Quarter Ending	Expected Change
31 March	Increase by 5%
30 June	Decrease by 3%
30 September	Decrease by 2%
31 December	Increase by 20%

Lisa also believes that the selling price should increase to $6.50 for the last two quarters of 2020.

Required

Prepare a Sales Budget for 2020.

Ensure you show all your workings. You may use either word or excel to answer this question but your final submission must be in this one document and not include screen shots or photos as these cannot be reviewed by Turnitin.

Please note: you will only be penalised once for an error, please continue with the question even if you are not sure as you may receive marks.

Part (b) (5 marks)

Stephen's Exotic Snails has provided the following estimates relating to the first quarter of the financial year, the quarter beginning 1 July 2020 and ending 30 September 2020:

Cash Sales	$135,000
Credit Sales	$210,000
Receipts from Debtors	$175,000
Wages paid	$125,000
Rent paid	$36,000
Utilities paid	$8,500
Administration paid	$34,500
Depreciation of machinery	$13,500
Receipt of Loan	$45,000
Credit Purchases	$96,000
Payment to Creditors	$105,000

The cash balance at 1 July 2020 is expected to be $10,500.

Required

1. Prepare a Cash Budget for the quarter ending 30 September 2020. (4 marks)

2. Based on your Cash Budget, comment on whether the business can afford to purchase a new delivery vehicle for $15,000 during this quarter. (1 mark)