QUESTION 5 The following set of assumptions and forecasts relate with sales for Macabe Ltd. for the months June through to October inclusively. (a) Actual and expected sales through October are as given below: Month Sales (E) April 590,000 (Actual) May 565,000 (Actual) June 600,000 July 500,000 August 400,000 September 200,000 October 100,000 (b) 40% of sales are for cash. Of the remaining 60% of sales, 75% is collected in the following month and 25% is collected two months after sales. (c) Raw materials inventory purchases are equal to 60% of the following months sales. 70% of purchases are paid for in the month following the purchase and the remainder are paid in the following month. (d) Wages are forecasted to be equal to 30% of expected sales (e) Payments on leases for equipment are E20,000 per month (f) Interest payments of E40, 000 on long-term debt are due in June and September. (g) A E60,000 dividend will be paid to shareholders in June. (h) Tax payments of E35,000 will be paid in June and September. (i) E200,000 is scheduled to be paid in July for a capital investment. (j) The company must keep a minimum cash balance of E45,000 by agreement with its bank. (k) Its cash balance at the end of May was E60,000. Required: (a) Prepare a schedule for cash to be received from sales (b) Prepare a schedule for expected cash purchases (c) Prepare a cash budget that shows all inflows and outflows of cash as well as amount to be borrowed and invested for the period.