Mark Ltd investigates budget variances on a quarterly basis. The following data is provided to you. Estimated total sales: April $ 55,000 and May $ 50,000 Cash sales are estimated to be 25% of total sales. Debtors are expected to pay 60% in the month of sale and 35% in the month after the sale. Estimated purchases: April $30,000 and May $ 36,000 All purchases are to be on credit and are to be paid for in the month following the purchase. Purchases for March were $22,000. Estimated operating expenses are: Transport expenses paid in cash 15% of total sales. Office salaries paid in cash: April $9,000, May $11,600. Depreciation is charged at 25% per annum on new equipment purchased for $150,000 in April. The equipment was purchased on credit in April and will paid for in May. Other information: The owner contributed $75,000 as the opening balance of cash for the business in April. The owner intends withdrawing $3,000 per month for private use. The company wants to maintain a minimum cash balance of $25,000 and has set up a line of credit at the local bank that can be used to cover any shortage Required: (a) Prepare a cash budget for the two months April and May. (13 marks) (b) List two problems that may be encountered in preparing a budget. (2 marks)