1. Prepare a Cash Collections Budget for July, August and September.

2. Prepare a Cash Collections Budget for July, August and September. Show a separate column for July, august, september. Is this a good result for Home Town Ltd? Briefly explain.

3. Explain 2 ways in whixh Home Town Ltd could improve their cash position?

This is the question. Q1 says prepare cash collections budget and Q2 says prepare cash budget.

Forecasted details for Home Town Ltd's first 3 months of operation are provided below:- July August September Sales $400,000 $460,000 $500,000 Purchases $220,000 $240,000 $310,000 It is expected that 30% of Sales are Cash Sales. Credit Sales will be collected in the following pattern:- 40% in the month of sale 50% 1 month after the sale 10% 2 months after the sale Additional Information . All purchases are made on credit and payable one month after the purchase. Management expenses are $30,000 per month, plus 12% of the month's sales. Selling Expenses are $70,000 per month. Depreciation of Delivery Van is $4,000 per month. This amount has been included in the Selling Expenses. Management is installing a new computer system in July at a cost of $10,000. A deposit of 35% is required in July and the balance to be paid in August. Cash proceeds of $25,000 are due in July for Home Town Ltd's from initial issue of shares. Payment for new office equipment of $15,000 is to be paid in August. The company is expected to commence operations with a bank balance of $12,500 on 1 July. Required 1. Prepare a Cash Collections Budget for July, August and September. 2. Prepare a Cash Budget for July, August and September. Show a separate column for July, August & September. Is this a good result for Home Town Ltd? Briefly explain. 3. Explain 2 ways in which Home Town Ltd could improve their cash position? ( 5+ 10 + 1 = 16 marks )