The following information pertains to a local company. The company hired you to prepare a cash budget for the first six months of 2024: (a) Cost and prices unchanged. (b) Cash sales - 25% and credit sales - 75%. (c) 60% of credit sales are collected in the month after sales, 30% in the second month and 10% in the third. No bad debts are anticipated. (d) Sales forecasts are as follows: October 2023 November 2023 December 2023 January 2024 February 2024 $ 1,200,000 1,400,000 1,600,000 600,000 800,000 (e) Gross profit margin 20%. (f) Anticipated purchases: January 2024 February 2024 March 2024 $ 640,000 640,000 960,000 (g) Wages and Salaries to be paid: January 2024 February 2024 March 2024 $ 120,000 160,000 200,000 March 2024 April 2024 May 2024 June 2024 July 2024 April 2024 May 2024 June 2024 April 2024 May 2024 June 2024 $ 800,000 1,200,000 1,000,000 800,000 1,200,000 $ 800,000 640,000 960,000 $ 200,000 160,000 140,000 (h) Interest on $1,000,000 @ 12% on bonds is due by the end of March and June. (i) Tax payment due in April $200,000. (j) Capital expenditure on plant and machinery planned for June is $120,000. (k) The Company has a cash balance of 400,000 at 31.12.2023. (1) The company can borrow (if needed) on monthly basis assuming the company wants to keep a minimum cash balance of $400,000 at the end of each month. (m) Rent is $ 8,000 per month. Required: 1. Prepare in good form the cash budget for the first six months of 2024. 2. Borrowing has a cost, so before you start borrowing what steps you may take to meet the $400,000 minimum cash requirement. 3. Why is the cash budget important since we prepare a budget income statement?