1| Page Damelin live love learn leave a legacy. Cash Budget Question Alberta Ltd's estimated revenues for the first four months of 2010 is as follows: January R108,500 February R106,200 March R120,500 April R120,500 All sales are on credit. Customers are expected to pay one-quarter of their debts a month after the sale and the remainder after two months: sales expected for November 2009 are R95,500, and for December 2009, R105,300. Material purchases for the same period are: January R21,500 February R21,200 March R24,400 April R24,100 One fifth of the materials are paid for in the month of purchase and the remainder two months later: deliveries received in November 2009 were R18,800, and in December 2009, R19,600. Old factory equipment is to be sold in February 2010 for R2,800. Receipt of the money is expected in April 2010. New equipment will be installed at a cost of R20,000. One quarter of the amount is payable in February2010 and the remainder 2 months later. Wage costs during this period are as follows: January R4,300 February R4,200 March R4,800 April R4,900 Three-quarters of the wages are payable in the months they fall due, the remainder a month later: wages for December 2009 are estimated at R4,200. Overhead costs are as follows: January R72,300 February R70,800 March R80,200 April R80,400 R12,000 of total monthly overheads are payable in the month they occur, and the remainder one month later: total overheads for December2009 are expected to be R69,400. The opening bank balance at 1 February 2010 is expected to be an overdraft of R11,000. REQUIRED: 2 Page Damelin live love learn leave a legacy (a) Construct a monthly cash budget for Alberta Ltd for the 3 months from 1st Feb to 30th April 2010, showing the cash balance at the end of each month. (A total column is not necessary (35 marks) (b) Advise the company about possible ways in which it can improve its cash management both in the long-term and the short-term (15 marks) Question 2