Question 1 (Total 25 marks) ABC Ltd has asked you to prepare a cash budget for the six months from 1 July 2020 to 31 December 2020 and has provided you with the following information: 1. Trade debtors and trade creditors at 30 June 2020 were N$80,000 and N$84,000 respectively. 2. ABC Ltd expects to sell 700 units in each of July and August, 900 units in each of September and October, 1,200 units in November and 800 units in each of December 2020 and January 2021. The selling price of each unit is calculated by adding a mark- up of 50% to the unit cost price of N$120. 3. 20% of each month's sales will be for cash and will be subject to a 5% cash discount. The remainder will be sold on credit and be paid for in the month following the month of sale. 4. Purchases in each month will be sufficient to meet the next month's sales. They will be paid for in the month following the month of purchase and be subject to a 2% settlement discount. No other stocks will be held. 5. Bank overdraft interest will be paid at 1% per month based upon the previous month's closing balance. 6. The Fixed overhead cost for September, October and December will be N$60,000, N$30,000 and N$30,000 respectively. 7. The variable overhead costs per month will N$7,500,N$8,500 for the first 2 months and N$9,500 for remaining months. 8. The bank overdraft on 1st July 2020 will be N$20,000 Required: (a) Prepare the cash budget for the period July to December 2020 (clearly show the workings) (15 marks) (b) Explain, giving two reasons why the profit or loss of a business at a period end does not usually reflect its cash flow position at the same date. (3 marks) (c) Discuss the difference between a bank overdraft and Bank loan