QUESTION 3 Austral Ltd is preparing a cash budget for May and June of 2019. 4 Past records reveal that 10% of all credit sales are collected during the month of sale, 50% in the month following the sale, 30% in the second month following the sale and 10% in the third month following the sale. 4 The company pays for 65% of purchases in the month after purchase, and the balance is paid in the month following that." Selling expenses amount to $3 600 per month plus 15% of monthly sales. Administrative expenses are estimated to be $12 200 per month, which includes $3 800 of depreciation expense. + Finance expenses are $1200 per month. All selling and distribution, administrative, and finance and other expenses (except depreciation) are paid for when incurred. It is planned to purchase equipment during May 2019 at a cost of $5 200.4 A $6 000 loan payable will be repaid in full including interest charges during June 2019. The interest due at the maturity date will be $1 250.4 The company's expected Cash at Bank balance at 1 May 2019 is $17 200.- Estimated sales and purchases data are as follows. Sales Purchases 2019 February March April May June $75 000 66 000 88 000 60 500 71 500 $38500 33 000 55 000 27500 38 500 Required: (a) Ignoring GST, prepare a cash budget for May and June 2019, by month and in total. - (b) Discuss why preparing a Cash Budget is important for maintaining & monitoring cash adequacy in an organisation. Provide four (4) reasons in support of your answer. (a) Cash Budget for May and June 2019 May { June Total a