Assessment 1 Task 1 Management of Staples Pty Ltd have been provided you with the following information for the period 1 April – 31 July 2016 in order to prepare a budgeted Income Statement and Cash Budget. Following a meeting with management and the business owners the following budget milestones have been established. Accounts Balances 1 April $ $ Cash at Bank 6,000 Inventories 21,800 Accounts Receivable (net) 12,000 Prepaid Rent 1,000 Furniture & Equipment 27,000 Accumulated Depreciation – Furniture & Equipment 4,600 Plant & Machinery 54,000 Accumulated Depreciation – Plant & Machinery 22,400 Accounts Payable 7,000 Accrued Wages 1,200 Bank Loan 48,000 Share Capital 30,000 Retained Earnings 8,600 Totals $121,800 $121,800 Budgeted Sales: April 25,000 May 27,000 June 20,000 July 23,500 Cash Sales account for 50% of sales. Credit sales are collected 40% in the month of sale and 60% in the following month. Purchases are expected to be made at the rate of 55% of expected sales for each month and are purchased on credit. The company requires the monthly ending inventory balance to be $20,000 plus 25% of the next month's purchases. Creditors are paid 20% in the month of purchase and 80% in the next month. Dividends are paid by the business at the rate of $4,000 per quarter. Rent on premises is $3,000 per quarter, paid on the last day of the first month of each quarter. Wages are normally paid as incurred and this will occur in the quarter ended 30 June. In the quarter ended 31 March, pay day fell on 25th March so 6 days wages were outstanding at 31 March and are yet to be paid. Wages are normally incurred at the rate of $5,000 per month. The following are paid as incurred: electricity $400 per month, interest on loan $180 per month and cleaning contractor $200 per month. The loan principal is paid at the rate of $2,000 per quarter. Depreciation is charged at 10% per annum on the cost of the furniture and equipment and 15% per annum on the cost of the plant and machinery. New machinery will be purchased for cash on 30th June for $10,000 Requirements: Create the schedules required to create: a. A Budgeted Income Statement b. A Cash Budget Determine where the business is sensitive to changes in input data and develop appropriate KPI's. Produce a Word document as a budget report and in that document include: A brief explanation for the KPI's chosen (item B above) including an explanation of how negotiations would be conducted with stakeholders on agreeing to the use of these KPIs as their performance measurement criteria.