Singh Song Pte Ltd had an opening cash balance of $40, 000 as at 1st June 2020. Budgeted sales were as follows: $ May 2020 80,000 June 2020 90,000 July 2020 75,000 August 2020 75,000 Receipts from sales: The company allows a cash discount of 2% if payment is made within the month of sales and 1%discount if payment is made in the month following the sale. It is estimated that 50% of the accounts receivable pay within the month of the sale, and a further 50% pay in the month following the sale. Purchases are expected to be 30% of the sales value. Purchases are paid for 1 month after sales. The trade supplier allows a 2% discount for all payment made on time. Salaries have been set at $30,000 per month and payable at the end of the month. Overheads are set at $10,000 per month. The overheads are paid for in the month incurred. Overheads include depreciation of $2,000 per month. Renovations to the premises are to be undertaken in June 2020 for $100,000. This will be paid for in two equal monthly installments starting in June 2020. The owner withdraws cash of 6,000 monthly.

Required: a) Prepare a Cash Budget for the business for each of the three months from June to August 2020 showing the ending cash balance at the end of each month. (12 marks) b) Briefly explain the usefulness of preparing a cash budget. (3 marks)