a) Nada Ltd produces light weight backpacks made of durable and waterproof material. Prepare a cash budget for the months February and March 2023 using the following information:

The cash balance at the beginning of February 2023 is $60,850. The business aims to keep a cash balance of at least $10,000 at the end of each month.

Sales revenue for January 2023 is expected to be $555,000; expected sales for February 2023 are $640,000 and for March 2023 are $665,000. All sales are expected to be cash sales.

Expected purchases in February 2023 are $516,000 and March 2023 are $485,000. The business pays its suppliers 75% of the purchases cost in the same month and the remaining amount in the month after purchase. There were no purchases made in the month of January 2023 due to enough stock remaining from the previous year.

Wage costs are expected as follows: January 2023 $88,000; February 2023 $90,000 and March 2023 $102,000. Wages incurred are paid in the same month.

Manufacturing overhead paid for January 2023 is expected to be $58,000; expected for February 2023 are $60,700; expected for March 2023 are $53,800 which includes $5,500 for online advertising via social media that will take place in April 2023.

Administration and selling expenses paid for January 2023 are expected to be$76,000; expected for February 2023 are $83,000; expected for March 2023 are $77,000 including amount of $4,000 which is for an advertising campaign to be conducted in March 2023.

Nada Ltd are anticipating a major upgrade to their IT system to provide enhanced security and additional payroll features for $68,000 to be paid for in cash is expected in February 2023

b) Evaluate the Cash Budget and address any issues that you might find in the budget.