Question 2

Garden Sculptures presents the following data relating to the expected operations for the months of January to March 2016.

	January			February			March
Credit services provided Receipts from accounts receivable Cash services Cash received from the sale of old equipment Salaries and wages paid Depreciation on equipment Payment for supplies Cash purchase of new equipment Administration costs Credit purchase of supplies		$ 8 000 20 000 1 950 8 500 500 2 600 20 000 2 000 1 900			$12 000 30 000 2 250 2 000 8 500 500 3 500 2 000 2 150			$12 400 5 000 3 300 8 500 500 2 800 2 000 1 890

Required

a. Prepare a cash budget on a monthly basis for the three months ending March 2016. The cash balance at 31 December 2015 was $25 000.

b. Explain how a variance report would help the owner of Jamies Landscapes monitor the entitys cash position.