Green Friends Ltd is a garden design and landscaping business that started operations on 1 September 2020. The following information has been provided by the firm.

In September, cash sales were $17,500 and credit sales $32,500. Total expected sales in the following three months are: $70,000 in October; $78,000 in November; and $82,000 in December. The company expects 35% of the sales of each month to be cash sales and the remainder credit sales. Credit sales are expected to be collected 40% in the month of the sale, 30% in the next month, and 30% in the following month.

All purchases of inventory are on credit. Purchases of inventory in September were $40,000. The company estimates purchases in the following three months to be: $26,000 in October, $30,000 in November and $32,000 in December. Purchases are paid 80% in the month of purchase, and 20% in the following month.

Wages expense is estimated to be $19,000 in October, $20,000 in November and $22,000 in December, paid in cash.

Other operating expenses are budgeted to be $18,000 in October, $19,000 in November and $20,000 in December, paid in cash.

Depreciation expenses of $1,100 per month are expected.

The cost of sales is estimated as 45% of sales revenue each month.

On 1 September, equipment costing $12,000 was purchased and paid in cash.

Cash estimated from issue of shares in November: $25,000

The cash balance at 1^st October 2020 was $1,500

Prepare a cash budget for October, November and December 2020

	Oct ($)	Nov ($)	Dec ($)

5. What is the amount of accounts payable at 31^st December 2020?

6. How can you improve the cash budget?