Value Products Ltd manufactures a single product. You are the management accountant responsible for preparing the quarterly budgets of the next quarter from July to September 2020. Your colleague, the financial accountant, has provided you the following extracted data from the balance sheet as at 30 June 2020:

AssetsLiabilities

Accounts Receivable$250,000Bank Overdraft$90,000

Plant and Machinery$800,000 (Cost)Dividend Payable$10,000

Long-term Loan 15%$400,000

The following transactions are expected during the next three months:

Sales

Purchases

Expenses

January

$1,500,000

$1,000,000

$200,000

February

2,000,000

1,500,000

250,000

March

3,000,000

2,800,000

300,000

All sales are on credit and the collections have the following pattern:

During the month of sale:80% (early payment discount of 4% is given)

In the subsequent month:20% (no discount)

Payments for purchase are made in the month of purchase enjoying a 10% early payment discount.

Expenses shown above include depreciation of machinery which is calculated at a rate of 12% per annum on cost. Expenses are paid for in the month in which they are incurred.

The dividend payable will be paid in July.

Loan interest for the three months will be paid in September.

Required:

(a) write down Cash Budget for each of the three months from July to September 2020.

(b)write down Budgeted Income Statement for the period from July to September 2020.