4 (16 marks) Gamesman is a retail store selling video games. Sales are uniform for most of the year but pick up in June and December both because new releases come out and because customers purchase games in anticipation of summer or winter holidays. Gamesman also sells and repairs game systems. The forecast of sales and service revenue for the March-June 2021 is as follows: Month Expected Salse Revenue Expected Service Revenue Total Revenue March April May $9,000 11,000 12,400 $1,500 2,000 2,800 5,200 $10,500 13,000 15,200 24,600 June 19,400 Almost all the service revenue is paid for by bank credit card, so Gamesman budgets this as 100% bank card revenue. The bank cards charge an average fee of 3% of the total. Half of the sales revenue is also paid for by bank credit card, for which the fee is also 3% on average. About 10% of the sales are paid in cash, and the rest (the remaining 40%) are carried on a store account. Although the store tries to give store credit only to the best customers, it still averages about 2% for uncollectible accounts; 90% of store accounts are paid in the month following the purchase, and 8% are paid 2 months after purchase. Required: (a) Calculate the cash that Gamesman expects to collect in May and in June 2021. Show calculations for each month. (6 marks) (b) Gamesman has budgeted expenditures for May of $8,700 for the purchase of games and game systems, $2,800 for rent and utilities and other costs, and $2,000 in wages for the two part-time employees. i. ii. Given your answer to requirement (a), will Gamesman be able to cover its payments for May? (3 marks) The projections for May are a budget. Assume (independently for each situation) that May revenues might also be 5% less and 10% less and that costs might be 8% higher. Under each of those three scenarios, show the total net cash for May and the amount Gamesman would have to borrow if cash receipts are less than cash payments. Assume the beginning cash balance for May is $200. (5 marks) (c) Why do Gamesman's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Has preparing the cash budget been helpful? Explain briefly. (2 marks)