Q.1 The directors of Kingston & Co. were concerned about the the companys cash flow. They requested their accountant to prepare a cash budget for the four months ending 30 April 2016. The following estimated sales and purchases figures are for the months of January 2016 to June 2016: Month Sales($) Purchases($) Jan 65,000 81,200 Feb 70,000 87,500 Mar 72,500 90,600 Apr 76,250 95,300 May 80,000 100,000 Jun 78,750 98,400 Additional information; (i) Half the sales are normally paid for in the month in which they occur. The remaining sales are paid for net in the month following the sale. (ii) Half of the purchases are paid for in the month of purchase. The remainder is paid in full in the following month. (iii) Wages of $12,000 per month are paid in the month in which they are earned. It is expected that the wages will be increased by 10% from 1st March 2016. (iv) Rent will cost $60,000 per annum payable three monthly in advance in January, April and December each year. (v) The directors have arranged a bank loan of $60,000 which would be credited to companys current account in February 2016. (vi) The ordinary dividend of $12,000 for the year 2015 will be paid in March 2016. (vii) The bank balance at 31st December 2015 is $120,000. Required: a) Prepare a cash budget for the four months ended 30th April 2016. Give your answers to the nearest dollar ($) b) Explain the benefits of budgeting to management of Kingston & Co c) What are the limitations of budgeting?