Question B2 Baker Ltd, a manufacturing company, is preparing budgets for Quarter 3 of 2021. The following information has been prepared so far: Estimated sales values June 91,000 July 80,000 August 86,000 September 102,000 Direct wages 13,000 per month. Estimated direct material purchases March 45,000 April 25,850 June 34,500 July 37,800 August 28,900 September 31,500 October 17,800 November 31,400 Notes: Baker sells 65% of its goods for cash. Baker budgets that 5% of credit sales will be irrecoverable The remainder of customers receive one month's credit. 50% of payments to material suppliers are made in the month following purchase. 30% of payments to material suppliers are made two months following purchase. 20% of payments to material suppliers are made in the month of purchase. Wages are paid as they are incurred. Baker takes one month's credit on all overheads. Production overheads are 10,200 per month. Selling, distribution and administration overheads amount to 18,900 per month. Included in the amounts for overhead given above are depreciation charges of 3,000 in production overheads) and 1,900 (in selling, distribution and admin overheads) Baker expects to purchase a new machine August for a cash payment of 86,850. The cash balance at the end of June is forecast to be an asset of 12,350. . (a) Prepare a cash budget for each of the months July, August and September 2021. (b) Discuss the importance of a cash budget, to a company such as Baker Ltd