Question 3 g 20 marks 35 minutes) Ronald Chen, controller for Precious Retailers, has assembled the following data to assist in the preparation of a cash budget for July and August 2021. As at July 13" the company has a beginning cash balance of $ 13 500: Sales: May (actual) $100,000 June (actual) 120,000 July (estimated) 170,000 August (estimated) 100,000 September (estimated) 135,000 October (estimated) 1 10,000 The company's gross margin is 20%. Each month, 30 percent of sales are collected in cash and 70 percent are on credit. The collection pattern for credit sales is 20 percent in the month of sale, 50 percent in the following month, and 30 percent in the second month following the sale. The records for purchases and beginning inventory for June 1st and projected gures for the coming quarter: June July August September Cost of sales $96,000 136,000 80,000 108,000 Desired end Inv 68,000 E m 44,000 Total requirements 164,000 '? ) '3' 134,000 152,000 Less beg. Inventory 80,000 36,000 ?_(e_) 54,000 Purchases 84,000 ?( c) ? ( f) 98,000 The desired ending inventory is 50% of the next months cost of sales. Inventory purchases are paid for in the month following the purchase and no discounts are taken. The under noted expenses are incurred each month and are paid in the same month. Salaries and wages 10,000 Depreciation on plant and equipment 4,000 Utilities 1 ,000 Other expenses 1,700 Additional information: o A new truck for $ 120,000 will be bought and paid for in July and an old truck will disposed in the same month for cash proceeds of $ 22,000. Common shares were sold for $ 100,000 and cash was received in August 2021. Property taxes of $15,000 are to be paid 50% in July and 50% in August 2021. Advertising fees of $12,000 were paid 50% in July and 50% in August 2021. Dividends for $ 3,000 are to be paid in August 2021. The company has a policy of maintaining a minimum cash balance of $10,000. If necessary, it will borrow to meet its short-term needs. All borrowing is done at the beginning of the month. All payments on principal and interest are made at the end of a month. The annual interest rate is 9 percent. The bank will finance exact amounts needed. If there is excess cash the borrowed funds can be repaid. Instructions: a) Provide your answers for the purchases table indicating letters a to f. b) Prepare a schedule for cash budget for JULY and AUGUST only