QUESTION 6 CASH BUDGET (MARKS 15) Elvstrom Company prepares monthly cash budgets. Provided below is a set of relevant data extracted from existing reports, and the sub-budgets for the two months of September and October 2020. Credit sales Direct materials purchases Direct labour Manufacturing overhead Marketing and administration expenses Proceeds from sale of old equipment Cash payment for new IT equipment September October $314,000 $412,000 162,000 216,000 51,400 55,200 21,600 23,400 39,000 39,000 8,200. 16,500. All sales are on credit. Collections from accounts receivable normally have the following pattern: 60 per cent in the month of sale, 30 per cent in the month following the sale, and 10 per cent in the second month following the sale. Fortunately. Elvstrom Company does not have much trouble with bad debts. Sales in June, July and August were $295,000, $266,000 and $302,000 respectively. Direct material purchases are paid for in the month following the purchase. Purchases in August were $182,000. Manufacturing overhead includes $12,500 for depreciation expense, while the marketing and administration expenses include an amount off $5600 for depreciation expenses. Elvstrom Company expects to be able to repay the principal on a $150,000 loan in October.. REQUIRED: a. Prepare a schedule of receipts from accounts receivable for the two months ending 31 October 2020. b. Prepare a cash budget for September and October 2020. The cash balance at 31 August 2020 was $12,600. c. As part of its longer term plans, Elvstrom Company was hoping to commence a product reinvention program for one of its core products. The project would require an initial cash commitment of $30,000. Management was hoping to fund this from the cash flows of the business. Does this seem feasible?