38.500 The management accountant at Miller Merchandising & More, Odal use is in the proceso preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this arte. Estrads from the sales and purchases budgets Cash Sales Sales On Account Purchases August 385.000 1640.000 $420,000 September 570.000 $550.000 $550.000 October 500.000 $100.000 November $77.160 $100.000 5000.000 December 5174.703500.000 $450.000 An analysis of the records shows that trade recevere sted cording to the folowing credit pofter, in accordance with the credeam 4:30,90 50% in the month of sale 30% in the first month following the sale 20% in the second month following the Expected purchases indude monthly cash purchases of 5%. Al other purchase account Accounts payable are weted as blows is accordance with me 230,00 80% in the month in which the inventory is purchased 40% in the following month 1) Foed operating expenses which are every throughout the year, we estimated to be 51.680.000 per annum, including depreciation on current assets of 5420.000 annum and is led monthly MWages and stories are expected to be 52.280.000 per annum and will be pod moty Other operating expenses are expected to be $100.000 per quarter and be seed monthly vi) in the month of November, an old motor vehicle which cost $450.000 bewold to an employee again of $30.000 Accumulated depreciation on the motor vehicle at the time is expected to be $540,000. The employee will be lowed to pay a deposito the sling price in November and the balance settled in oculamourt in December 2021 6 January of 2002 vii) Computer equipment, which is estimated to cost $320.000, will be cured in November The manager has made arrangements with the dealer to make a cash deposit of 50% of the amount upon signing of the agreement in November, with the balance to be seen four equal monthly intiments, ring in December 2011 vill) The management of Mer Merchandising Company has negotiated with a tot office space to her begening November 1. The rent 5824.000 per The first mort's rent along with one mont's safety depositaexpected to be collected on November 1. Threater monthly rental come becomes duet the beginning of each Continued x) Taxation of $85.000 has to be settled in December A money market instrument purchased by the company with a face value of $300.000 mature on October 15, 2021 in order to meet the financial obligations of the business management has decided to liquidate the investment on muurty on the tale quarterly Interest computed to opreded to be collected The cash balance at December 31, 2021 expected to be an overdraft of $200.000 Required: The business needs to have a son of the turcashows and therefore the preparation of the following A schedule of budgeted cash collections for trade receivables (les on account for each of the month October to December . Adue of expected them for counts payable purchases for each of the month October in December A cash budget with a com, for the quarter ending December 31, 2021 shown expected cash receipts and payment for each month and the ending cash bange for each of the three months, given that no financing activities took place (25% marks Another team member who is preparing the Budpoled Balance Sheet for the business to the same quarter and has asked you to umishim with the figures for the expected trade receivable and payable to be included in the statement at December 31, 2021. sta reasonable request yes, what should these amounts be? Upon receipt of the budget the team manager has now informed you that the management of Mr Merchandising & More have indicate a desire to maintain a much balance of $125.000 each month Based on the budget prepared wit the business be achieving this desired target? Given that the management does not wish to bow any funds from outside sources suggest three intimal strategies that the business may employ in order to improve the organization's monthly cash flow. Each strategy mulbely explained 3% marks The management accountant at Miller Merchandising & More, Odail Russell is in the process of preparing the cash budget for the business for the fourth quarter of 2021. It is customary for the business to borrow money during this quarter. Extracts from the sales and purchases budgets are as follows: Cash Sales Month Sales On Account Purchases August $85,000 $640,000 $420,000 September $70,000 $550,000 $550,000 October $88,550 $600,000 $500,000 November $77,160 $800,000 $600,000 December $174,870 $500,000 $450,000 i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90: 50% in the month of sale 30% in the first month following the sale 20% in the second month following the sale ii) Expected purchases include monthly cash purchases of 5%. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms 2/30, n60: 60% in the month in which the inventory is purchased 40% in the following month iii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $1,680,000 per annum, (including depreciation on non-current assets of $420,000 per annum) and is settled monthly. iv) Wages and salaries are expected to be $2,280,000 per annum and will be paid monthly. v) Other operating expenses are expected to be $108,000 per quarter and will be settled monthly vi) in the month of November, an old motor vehicle, which cost $650,000, will be sold to an employee at a gain of $30,000. Accumulated depreciation on the motor vehicle at that time is expected to be $540,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in November and the balance settled in two equal amounts in December 2021 & January of 2022. vii) Computer equipment, which is estimated to cost $320,000, will be acquired in November. The manager has made arrangements with the dealer to make a cash deposit of 50% of the amount upon signing of the agreement in November, with the balance to be settled in four equal monthly instalments, starting in December 2021 viii) The management of Miller Merchandising Company has negotiated with a tenant to rent office space to her beginning November 1. The rental is $624,000 per annum. The first month's rent along with one month's safety deposit is expected to be collected on November 1. Thereafter, monthly rental income becomes due at the beginning of each month. ix) x) Taxation of $85,000 has to be settled in December. A money market instrument purchased by the company with a face value of $300,000 will mature on October 15, 2021. In order to meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date quarterly interest computed at a rate of 5% per annum is also expected to be collected. The cash balance at December 31, 2021 is expected to be an overdraft of $236,000. xi) Required: (a) The business needs to have a sense of its future cashflows and therefore requires the preparation of the following: A schedule of budgeted cash collections for trade receivables (sales on account) for each of the months October to December. (5 marks) A schedule of expected cash disbursements for accounts payable (purchases on account) for each of the months October to December (4 marks) A cash budget, with a total column, for the quarter ending December 31, 2021, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place. (25/2 marks) (b) Another team member who is preparing the Budgeted Balance Sheet for the business for the same quarter and has asked you to furnish him with the figures for the expected trade receivables and payables to be included in the statement at December 31, 2021. Is that a reasonable request? If yes, what should these amounts be? (2 marks) Upon receipt of the budget the team manager has now informed you that the management of Miller Merchandising & More have indicated a desire to maintain a minimum cash balance of $125,000 each month. Based on the budget prepared, will the business be achieving this desired target? Given that the management does not wish to borrow any funds from outside sources, suggest three (3) internal strategies that the business may employ in order to improve the organization's monthly cash flow. Each strategy must be fully explained. (3% marks) (c)