Page 2 of 4 A003-2-MAT ANSWER ALL QUESTIONS. QUESTION1 The owner of Neighbor Shop requested a cash budet for June 2019. After examining the records of the company, you find the following: 1. Cash balanse on June 1 2019 is $345. June $20,000 2. Actual sales for April, May and June are as follows: April May Cash sales $10,000 $15,000 Credit sales 25,000 35,000 Total sales $50,000 40,000 $35.000 $60,000 3. Credit sales are collected over 3-month period: 50 percent in the month of sales, 30 percent in the second month, and 20 percent in the third month. 4. Inventory purchases average 60 percent of a month's total sales. Of those purchases, 40 percent are paid in the month of purchase. The remaining 60 percent are paid for in the following month 5. Salaries and wages total $8,700 a month, including a $4,500 salary paid to the owner. 6. Rent is $1,200 per month. 7. Taxes to be paid in Jeune are $5,500. REQUIRED: (a) Explain why knowledge of cash flows is critical to a business. (4 marks) h) Prepare a cash budget for Neighbor Shop for the month ended 30 June 2010 with a supporting schedule for cash collections. (36 marks) (Total: 40 marks) PU Level 2 Asia Pacific University of Technology & Innovation 2019