Question 1 Kane, the owner of Cookie Cafe, prepares cash budgets for periods of 3 months (quarters). Kane has provided the following information to help with the preparation of a cash budget for the January-March and the April-June quarters 2019. Actual sales for the October-December quarter 2018 were $92000. Sales for the January-March quarter are expected to be $80000. Sales for the April-June quarter are expected to be $110000. 75% of sales are paid for in cash. 25% of sales are paid for on credit. Sales on credit are expected to be collected in the following manner: - 70% in the quarter of the sale - 28% in the quarter after the sale -2% are written off as a bad debt. Purchases are paid for in the month after purchase. . Purchases in December were $8500 and are expected to be as follows: January $7000 February $7000 - March $8000 - April $8000 - May $9000 - June $11000. Wages are expected to increase by 15% in the April-June quarter; all other expenses for the January-March quarter and the April-June quarter are expected to be the same as they were for the October-December quarter. Expenses incurred by the business in the October-December quarter were: - wages $50000 - delivery truck $500 - discount $600 - advertising $2000 - administration $5500. Accrued advertising at the end of June is expected to be $600. Kane plans to withdraw $3000 cash in February and $1000 inventory in June. Rent received from an investment property is $400 each month. The business repays $1500 per quarter off the principal of an interest-free loan. Kane will hire kitchen equipment for $900 in June and will pay the account in July.