Question $5-$ Cash Budget $(30$ marks$)$Mountain Sports has aquired an open line of credit up to a maxirmum of $$350,000.$ It Hill be necessary toconvince the bank manager of this rew Canmore branch ability to repay its line of credit including anyinterest.Managenent has provided the following list of assumptions to help in the preparati on of the cash budgetfnole goU wii need ko use the prejecied income statement proded in uesien $4$ tocomlete fhe cash butget$1.$ Beginning cash balance ivested by owners$2.$ Sales by quarter las $\%.$ of total p$$ojectedsales$]3.$ Type of collections from customers:Cash SalesCredit Sales $[$accounts$4.$ Merchandise purchases$5.$ Operaling expensesthe first quarterCash sales are collected in the quarter of the sale, all credit sales are collecled in the quarter afler the sale$\mathrm{.}6.$ Required ivest$$nent in euuipnenl$\_$paidin cashin$8.$ Minimum cash balanceMerchandise purchases $($cost of goods sold$]$ are all paid in the quarter following purchase. $($Quarter$1$purchases are bought in Quarter $1$ but paid for in quarter $2)\mathrm{.}9.$ Borrowing and Repayner$$ls:All other operaling experses $($all expenses axcept cost of goDds sold$]$ are paid on a monthly basis$\mathrm{.}7.$ Quarterly income tax payments paid in cashSales in UnitsSalesLess: Variable Costs:Cost of Goods SoldSales CommissionsTotal Variable CostsContribution MarginLess: Fixed Costs:Advertising$$ny borrowing will take place on the first day of the quarter and arny repayments are paid at the end ofthe quarter. All bgrrowing and paymenis are nade ininctements of $31\mathrm{.}000$ Interest on borrOWingcan be ignored.Property TaxesManagement has provided the following income statement to the bank manager the expectedRentSalaries & WagesTotal Fixed CostsNet Operating Incomeipare a cash budgetPercent of SalesEstimated SalesCASHBALANCE, BeginningCollections ftem customers:Cash SalesCredit SalesCASH AVALARLELess:Cash PaumerntsMetchandise purchases $($CoGS$)$Sales CommissionsAdvertiaingProperty TaxesRentSalaries & WagesEquipment PurchaseInaome tan InstallmentTotal DisbursementsCash Excess $($Deicienoy$)$Einancina $($Note t$)$BorowRepament of Principal $($showas negative$)$Net FinancingCashBalance. Ending$40\%60\%$Note $1$: Financing Caloulationsthe quarter$[$s$]$ in which repayments can be made, as requested by the compangs bank.Minimuumon oash balanceRounded to increment of$$1,000$Quarter $1$Mountain SportsGash Budget$25$$$130,50058,000$For the ear ended December $3152,20010,200$Quarter $2$ Quarter $3$ Quarter $4$Quarte$258,00024\%$$$125,280$$ $137,000$Static BudgetAmount$23\mathrm{.}030$e first gear of operation in Canmore by quarter$4,176522,000100\%221,000|42\%26,00024\%78\mathrm{.}30015\%9,000|299,30057\%222,700|43\%43,0007000101,000179,000|43\mathrm{.}700$$$148,180$ $$20,080423\%$d and$\%$anYear$3\%$Summary$100\%$$$522000$Note from ln structorTotal sales amount taken fra guestion $4,$Rermember to refer to questian $4$ as this ashbudget is u continuatian ef the Canmorepancion introd ucad in Cyueetie n &$.$ Thic wibe impcrtant for the cash disbursements asAmount to borrov $($repay$)$Bonoving $($Repagnents$]$