QUESTION TWO (15 MARKS)

Can this be done in an excel and shared back.

1. Patricia recently leased a space at TRM and opened a new business "the leather shop". The business has been good but she frequently runs out of cash. This has necessitated late payments of certain orders which in turn is beginning to cause problems with her suppliers. Patriciaplans to borrow from the bank to have cash ready as need be and she needs a forecast of just how much she must borrow. She has asked you to prepare a cash budget for critical period around April to July when the cash needs will be especially high.

She gives you the following information. The actual sales for March 2020 was Sh.40, 000/=

1. Below are sales forecast for the months of April to August 2020

	April Sh.	May Sh.	June Sh.	July Sh.	August Sh.
Sales	50,000	80,000	60,000	50,000	40,000

Patricia expects future sales collections to be as follows; 60% of sales are on cash basis and 40% are on credit and the credit period is one month.

1. The purchases budget is also given below

April May June July

Purchases 51,800 44.800 36,400 29,400

50% of purchases are paid for in the month of purchase and the balance one month after the month of purchase'. Purchases for the month of March was 33,600/=

1. Other expenses: are salaries and wages 2,500 per month and 15% commission on sales for the month payable 50% in the current month and 50 % one month after.
2. Miscellaneous expenses are 5% of current months sales and is payable in the same month
3. Other expenses are Rent is 2,000/, Insurance 200/ per month and Depreciation 500/ per month payable in the same month

Required

1. Create sales collection Schedule ( 2 MARKS)
2. Create Purchases and expense disbursement Schedule (3 Marks)

create a Cash budget for the four months to July 2020 (5 Marks)