ION THREE: Budgeting - 20 marks [36 minutes Shivani and Seema wish to prepare a budg September 2016 for a gift shop operating as "Presents following information is provided. a budget for the two months ending 30 uing as 'Presents for all Occasions'. The Actual credit sales 2016 Actual inventory Actual Expenses purchases on (including credit depreciation) $400,000 $95,000 $470,000 $ 105,000 June July $600,000 $625,000 2016 Estimated sales Estimated Expenses (including depreciation) on credit Estimated inventory purchases credit $295,000 $380,000 August September $520,000 $480,000 $82,000 $81,000 Sixty percent of sales are collected in the month of sale and forty percent in the month following the sale. Inventory is paid for in the month following delivery. Inventory on hand is kept to a minimum. The expenses are paid in the month when they are incurred. Depreciation is$5,000 per month. Shivani and Seema are planning to refurbish the shop at an estimated cost of $50,000. $10,000 will be paid as a deposit in August and the balance will be paid in September, when the work is completed. Shivani and Seema each take out $4,000 in cash per month for personal use. The bank balance on the 1 August 2016 is $18,000. . REQUIRED: a) Prepare a schedule showing collections from debtors for August and September 2016. b) Prepare a cash budget for "Presents for all Occasions' showing the monthly balances for August and September 2016. On 30 September 2016, a loan of $100,000 is due for repayment. Will Shivani and Seema be able to repay the loan when it falls due? Explain. d) Assuming that Shivani and Seema will not have sufficient cash to repay the loan, list three suggestions of things they could do to improve their liquidity