Rebecca has provided you with the following information to assist in the preparation of a Cash  Budget for the month of July 2023. In addition, she advises also that her business Bake It with Beck has been awarded a one-year contract to provide cookies, cakes and pastries for The Fusion and
Little Bang cafes at Deakin University. She has some funds in the business' retained earnings  amounting to $50,000.  

i) All sales are on a credit basis and are collected as follows: -

 60% of sales are collected in the month of the sales. 

40% of sales are collected in the month following the sales.

ii) All purchases are on a credit basis and are settled as follows: -

50% of purchases are settled in the month of the purchases 

 50% of purchases are settled in the month following the purchases.

 

	Budgeted Sales ($)	Budgeted Purchases ($)
may	100,000	52,500
june	120,000	64,000
july	110,000	68,000

iii) The business plans to take out a small business loan of $50,000 at the end  of July 2023 From Southpac Bank and will be repaying it back in June 2026.
It is a 3 year term loan at a variable rate of 6.24% p.a
iv) Selling and administrative expenses each month are $40,000.
v) The selling and administrative expenses include monthly depreciation  expense of $6,000.
vi) Sales commission is 15% of the total monthly sales and paid to the staff at  the end of every month.
vii) Kitchen Equipment costing $35,000 is expected to be bought in July and  paid in full next June with cash.
viii) Rebecca withdraws $5,000 every month. 

Required: Please prepare a Cash Budget for the month of July 2023. Advise Rebecca on the cash balance at the end of this period. Discuss options with regards to the business loan that she intends to take out. (15 marks)