Peter Smith plans to open a pizza slice shop in the centre of Belfast. Peter will use his savings of $14,000 to get the shop up and running. The rent for the pizza shop is set at $200 per month. Peter will employ one full-time chef and one part-time chef. The full- time chef will be paid $1,500 per month and the part-time chef will be paid $600 per month. The phone package that Peter has will cost $40 per month and has unlimited calls. Pete expects his electricity bill to be approximately $800 per quarter and is payable in March, June, September and December. Peter expects to spend $8000 getting the pizza store ready and expects to spend $1000 per month on ingredients in January and February and $1500 in March as demand picks up.

Peter expects his sales to be 2,000 in Jan and February and $3,500 in March.

a. Prepare a cash flow forecast for Petes Pizza Slices for January, February and March.

b. Explain why the actual cash flow situation might be different from Petes forecasts