Question: The business needs to have a sense of its future cash inflows and outflows for the quarter and therefore requires the preparation of the following: A schedule of expected cash disbursements for accounts payable for each of the months January to March.

Varsity Supplies \& Things is a family-owned store. The business is now approaching the end of the year and is desirous of identifying its expected cash inflows and outflows for the first quarter of the new year. You are the management accountant of the entity and have been tasked to prepare the cash budget for the business for the quarter ending March 31, 2023. The following data is available: (i) Extracts from the sales and purchases budgets are as follows: (ii) An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 4/30,n90 : 55% in the month of sale 35% in the first month following the sale 8% in the second month following the sale The remaining 2% is expected to be uncollectible (iii) Accounts payable are settled as follows, in accordance with the credit terms 2/30,n60 : 85% in the month in which the inventory is purchased 15% in the following month (iv) The management of Varsity Supplies \& Things has negotiated with a tenant to sublet office space to her beginning February 1. The rental is expected to be $576,000 per annum. The first month's rent along with one month's safety deposit is expected to be collected on February 1. Thereafter, monthly rental income becomes due at the beginning of each month. (v) Office Furniture \& Fixtures, which is estimated to cost $350,000, will be purchased in February. The manager has made arrangement with the suppliers to make a cash deposit of 40% upon signing of the agreement in February. The balance will be settled in five (5) equal monthly instalments beginning March of 2023. (vi) The management of Varsity Supplies \& Things is in the process of upgrading its fleet of motor vehicles. During February the business expects to sell an old delivery motor van that cost $720,000 at a loss of $45,000 to an employee. Accumulated depreciation on this motor van at that time is expected to be $375,000. The employee will be allowed to pay a deposit equal to 50% of the selling price in February; the balance will be settled in two equal amounts in March \& April of 2023. (vii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $2,088,000 per annum, which include depreciation on non-current assets of $504,000 per annum and are expected to be settled monthly. (viii) Other operating expenses which accrue evenly throughout the year are expected to be $672,000 per annum and will be settled monthly. Continued. (ix) A long-term bond purchased by Varsity Supplies \& Things two (2) years ago, with a face value of $450,000 will mature on January 15,2023 . To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date semi-annual interest computed at a rate of 8131% per annum is also expected to be collected (x) As part of its investing activities, the management of Varsity Supplies \& Things has just concluded an expansion project relating to the business's storage facilities. The project required capital outlay of $1,600,000 and was funded by a loan from a family member, who is a silent partner in the business. $320,000 of the principal along with interest of $35,000 will become due and payable on January 25, 2023. (xi) Wages and salaries are expected to be $3,384,000 per annum and will be paid monthly. (xii) The cash balance on March 31,2023 , is expected to be an overdraft of $248,000