Peter Sung has recently retired from the Coventry University, London and plans to set-up his own souvenir shop. He plans to invest 45,000 (15,000 each in January, February, and April) in the new enterprise and has asked for your assistance to produce a cash budget as the bank has asked for that prior to approving his request for an overdraft facility for his business.

The following has been budgeted for the first six months of the business:

Month	Sales	Purchases	Wages	Fixed costs	Variable costs
January	13,000	5,000	3,500	7,000	4,600
February	11,000	4,000	2,500		2,600
March	8,000	6,000	4,200		3,680
April	9,200	7,100	3,000	14,000	3,200
May	10,000	5,800	3,200		2,000
June	12,000	8,200	4,000		3,000

The following additional information is available:

1. 60% of each month sales are expected to be for cash. Credit customers pays a month in arrears.
2. Suppliers offer a month credit on purchases and are paid on time.
3. Wages, fixed costs and variable costs are paid in the month they are incurred.
4. The bank balance as at 1 April 2019 is expected to be 2,480.

Required:

1. Prepare a cash budget for the second quarter of the year ending 30 June 2019.

2. Identify and explain 3 limitations of budgeting.