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The CEO of Grawnwin Ltd. wishes to prepare a cash flow budget to estimate the company's cash Additional Notes The directors of the company have

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The CEO of Grawnwin Ltd. wishes to prepare a cash flow budget to estimate the company's cash Additional Notes The directors of the company have prepared the following estimates for the next 6 months: (b) All sales are on credit, 40% of debtors pay one month after the month of sale. 40% of debtors pay two months after the month of sale. 20% of the debtors pay three months after the sale. Sales in January 202 were 20,000. Sales in December 201 were f22,000. (c) All purchases are on one month's trade credit. (d) The Short-term loan is due for payment in March 202. (e) The Outstanding expenses are due for payment in April 202. (f) Administration and finance expenses (including depreciation of Premises) are expected to be f35,000 per month in February and f40,000 per month in subsequent months. (8) Selling and distribution expenses (including depreciation of Furniture) are expected to be f45,000 per month in February and f48,000 per month in subsequent months. (h) Depreciation of Premises is at the rate of 9% of cost per annum. (i) Depreciation of Furniture is at the rate of 12% of cost per annum. Required; - a. Prepare a cash budget for Grawnwin Ltd, for the six months ended 31 July 202 which shows the cash balance at the end of each month. (10 Marks) b. Critically discuss the cash flow problems will the company face over the next six months and how might the company deal with them? (10 Marks)

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