The ShireLodge provides a residential convention service in Englands Yorkshire Dales. The lodges general manager is concerned about cash flow in the next few months particularly as insurance will soon be due for payment. The following revenue and expense estimates have been developed for the first four months of 2021.

It has been estimated that sales in December 2020 will be 8,000. Previous cash collections indicate that 10 % of all ales are collected in the month prior to the sale as a deposit. Then, 50% of all sales are collected in the month of the sale, and 40% of sales are collected in the month following the sale.

Variable costs are 15% of revenue. 90% of variable costs are paid in the month of the sale to which they relate, and the remainder 10% are paid in the month prior to the sale (purchase of some food and other items in preparation for conventions). Salary and ground maintenance fixed cost are paid for as they are incurred. Insurance is paid for twice year, in January and July. It is estimated that on 1st January 2021 the lodge will have 4.200 in its bank account.

Prepare a cash budget showing receipts, payments, and opening and closing cash balances for each of the first three months of 2021. (Please, kindly show all the calculation)

January 10.000 February 12.000 March 13.000 April 14.000 Convention sales revenue Fixed costs: Salaries Ground maintenance Insurance 4.000 500 420 4.000 500 420 4.000 500 420 4.000 500 420