The estimated sales in cakes for Soheil Bakery for the period January to May are as follows: January 300 February 600 March 500 April 900 May 800 The selling price of each cake is AED96. All sales are on credit with 50% of sales to be collected in the month of sale, 45% in the month following the sale and the remaining 5% to be considered as uncollectible. Sales for December were AED60,000. The company maintains finished goods inventories equal to 40% of the following month's sales. Each cake requires 6 pounds of ingredients. The company requires that the ending inventory of ingredients be equal to 30% of the following month's production needs. The ingredients cost AED8 per pound. The company pay 60% of a month's purchases of ingredients in the month of purchase and the remainder is paid in the following month. The accounts payable on December 31 were AED20,000.

1. Prepare a sales budget, by month and in total, for the first quarter. Show your budget in both units and AED. (5 marks)

2. Prepare a schedule of expected cash collections, by month and in total, for the first quarter. (12 marks)

3. Prepare a production budget for each of the period January to April. (15 marks)

4. Prepare a direct materials budget, by month and in total, for the first quarter. (18 marks)

5. Prepare a schedule of expected cash disbursements for materials, by month and in total, for the first quarter. (15 marks)

6. Prepare a cash budget (25 marks) for the first quarter taking into consideration the following:

Rent of AED3,000 will be paid each month

Wages and Salaries expenses are AED4,000 each month

New equipment costing AED20,000 will be purchased and paid for in February.

The Company would like to maintain a minimum cash balance of AED30,000 at the end of each month

The company borrows money from the bank if necessary to maintain the minimum cash balance. The borrowed money is repaid without interest in the months when there is an excess cash balance. The beginning cash balance on January 1 was AED30,000.