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Question 1 Cruises, Inc. has budgeted sales revenues as follows: June July August Credit sales $135,000 $125,000 $ 90,000 Cash sales 90,000 255.000 195,000 Total sales $225.000 $380.000 $285.000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are: June $300,000 July 240.000 August 105,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $48.000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash. The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month. REQUIRED (A) Prepare separate schedules for July and August for: 0 Expected collections from customers ) Expected payments for purchases of inventory. (B) Prepare a cash budget for the months of July and August (5 marks) (5 marks) (10 marks) Question 2 The following information is available from the financial records of Albury Ltd: April May June July Sales $72000 66000 60000 78000 Purchases $42000 48000 36000 54000 . Receipts from customers are normally 70 per cent in the month of sale. 20 per cent in the month following the sale, and 9 per cent on the second month following the sale. The balance is expected to be uncollectible. Albury takes full advantage of the 2 per cent discount allowed on purchases paid for by the 10th day of the following month. Purchases for August are budgeted at $60000, and sales for August are forecast at $66 000 Cash payments for expenses (other than purchases) are expected to be $14 400 for the month of August. Albury cash balance on 1 August was $22000. Required Prepare a cash budget for Albury for August that includes: 1. Expected cash receipts during August 2. Expected cash payments during August. 3. Expected cash balance on 31 August