Bruce Hawkins own a retail store that sell new and used sporting equipment. He has requested CONFIDENTIAL QUESTION 1 (20 marks; 36 minutes) 3 a cash budget for October. After examining the records of the retail store, you find the following: 1 2 a. b. 35% 45% 16% C Cash balance on 1 October is R1 118 Actual sales for August and September are as follows: August September Cash sales R5 000 R6 000 Credit sales R60 000 R58 000 Total sales R65 000 R64 000 Credit sales are collected over a three-month period: 35% in the month of sale, 45% in the next month, and 16% in the second month after the sale. The remaining sales are uncollectible Inventory purchases average 70% of a month's total sales. Of those purchases, 40% are paid for in the month of purchase. The remaining 60% are paid for in the following Salaries and wages total R4 200 per month. Rent is R2 400 per month Taxes to be paid in October equal R965. Bruce usually withdraws R3 500 per month Advertising is R500 per month. Other operating expenses total R3 800 per month. V Internet and telephone fees are R320 per month d. month e f 9 h. k Bruce tells you that he expects cash sales of R6 500 and credit sales of R55 000 for October. He likes to have R3 000 on hand at the end of the month and is concerned about the potential October ending balance. Required: 1.1 Prepare a cash budget for October. Include supporting schedules for accounts receivable collections and payments on accounts payable. (18) 1.2. What recommendations would you give the owner to meet the desired cash balance? (2)