Joshua Studios expects the following sales in March, April and May: Sales $ Purchases $ March 240,000 180,000 April 250,000 210,000 May 300,000 225,000 The controller has determined that the company collects sales in the following pattern: 30% in the month of sale, 50% in the first month after sale, 10% in the second month after sale, and 10% uncollectable. Based on the agreed terms of trade with suppliers, 40% of purchases are expected to be paid in the month of purchase with the remaining 60% paid in the month after purchase. Required:

a) Prepare a cash budget for the month of May identifying the cash receipts, cash payments and the expected net increase or decrease in cash for the month of May?

b) If the opening Bank Balance on 1 May was $30,000, what would be the forecast closing balance at the end of the month?