The directors of Downing Ltd were concerned about the company's cash flow and they requested you to prepare a Cash budget for the three months from August 2017 to October 2017. The following information is available: Jun Jul Aug Sep Oct $000 $000 $000 $000 $000 Sales 1600 1500 1350 1200 1100 Purchases 800 880 920 800 840 Labour costs 80 100 120 100 112 Factory overheads 270 190 260 155 290 Office expenses 190 185 92 112 92 (i) Sales are made as follows: 20% of total sales are for cash 70% of total sales are on credit and are paid in the month after sale and are allowed 5% discount. 10% of total sales are on credit and are paid for two months after sale. (ii) Suppliers are paid two fifths (2/5) in the month following sale and the remainder two months following purchase. (iii) Office expenses include a monthly depreciation of $70,000. Both factory overheads and office expenses are paid in the month incurred. (iv) Plant will be sold in September for $50,000 after making a profit on disposal of $7,000. (v) 50% of labour costs are incurred in the month in which they are earned and the remainder one month after. QUESTION 1 [25 Marks] The directors of Downing Ltd were concerned about the company's cash flow and they requested you to prepare a Cash budget for the three months from August 2017 to October 2017. The following information is available: Jun Jul Aug Sep Oct $000 $000 $000 $000 $000 Sales 1600 1500 1350 1200 1100 Purchases 800 880 920 800 840 Labour costs 80 100 120 100 112 Factory overheads 270 190 260 155 290 Office expenses 190 185 92 112 92 (0) Sales are made as follows: 20% of total sales are for cash 70% of total sales are on credit and are paid in the month after sale and are allowed 5% discount. 10% of total sales are on credit and are paid for two months after sale. () Suppliers are paid two fifths (215) in the month following sale and the remainder two months following purchase. (iii) Office expenses include a monthly depreciation of $70,000. Both factory overheads and office expenses are paid in the month incurred. (iv) Plant will be sold in September for $50,000 after making a profit on disposal of $7,000. (v) 50% of labour costs are incurred in the month in which they are earned and the remainder one month after. (vi) A laptop will be bought in July for $12000. Payments will be made as follows: 50% in August 40% in September 10% in October Page 2 of 5 (vii) The company is expecting to receive dividend amounting to $4000 in October. (vii) Extension to premises will be made in August requiring an immediate payment of $45,000 (ix) The balance at bank on 1 August 2017 will be $5000