As the manager of Gifts Galore, a company that sells gifts and homewares, you are required to prepare cash budget for the month ofMayusing the following information:

April$

May$

Cash receipts from Accounts Receivable

170 000

138 000

Cash sales

30 000

27 000

Inventory purchases

49 000

45 000

Selling and administration expenses (includes$1 500 depreciation expense)

23 500

29 500

Dividends paid

13 800

Cash sale of equipment

6 000

Computer purchase for cash

11 000

Bank interest received

400

The following information is also provided:

-purchases of inventory are all on credit and fully paid in the month after purchase

-Selling and administration expenses are paid in the month they occurred

-The beginning cash balance on1stMay$15 500

For each question below use the above information

(It will be necessary for you to prepare the full cash budget to be able to provide the correct solutions)

1.What would be the total of the expected cash receipts?

33400 171400 17100 16500

2.What would be the total of the expected cash payments?

101800 97800 52800 88000

3.Calculate the ending balance for the 31stMay:

69600 15500 85100 86600

4.What would the expected June payment of inventory purchases be?

4000 45000 49000 0

5.Is the excess or deficit of receipts over payments:

85100 69600 69600 85100

6. Why is it necessary to prepare a cash budget?

7. What would be the amount of Selling and Administration expenses recorded in the April cash budget?