Question 3 Budgeting (TOTAL: 20 marks) Part A The following information is budgeted for Plumbing Limited for next quarter: Sales Merchandise purchases Selling and administrative expenses April ($) 110,000 85,000 50,000 May ($) 130,000 92,000 50,000 June ($) 180,000 105,000 50,000 All sales at the company are on credit: 40% are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. The company wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed. All borrowings are made at month end. The interest rate is 2% per month, which is paid in the following month. Required (show your calculations): Prepare a cash budget for May. The company expects to have $24,000 of cash on hand at the beginning of May. (8 marks)