Tom Goodsend is a sole trader who has not studied accounting nor business and is therefore worried that he does not know when there could be a surplus or a deficiency which could have allowed him to take better decisions for his business. He seeks your help to advise him on better planning and in preparing a cash budget so that he can know his cash balances in advance. He provides you with the following information: 1. Sales: September $135,000; October $187,000; November $209,000; December $225,000; January $258,000 and February $293,000. 2. 20% of sales are for cash. 3. 80% of the sales are on credit. 60% of the credit customers pay in the month following the sale. The balance is received two months after the sale. 4. Goodsend purchases goods one month before their sale. He charges a profit of 50 % on cost. 5. He pays for 75% of these goods in the month following purchase. The balance is paid two months after two months after purchase. 6. Administration expenses are 10% of sales and are paid one month following sales. 7. Wages of $18,000 will be paid each month. 8. A delivery van costing $20,000 will be purchased in November 2020 and paid for in full by cheque. 2 9. Equipment which originally cost $25,000 will be sold for $10,000 on 1 December 2020. 10. Equipment costing $30,000 will be purchased in November 2020. A deposit of 30% will be paid on delivery. The balance will be paid in ten equal instalments as from December 2020. 11. Goodsend intends to take cash drawings of $2,000 per month in November and December 2020, and $3,000 cash drawings each month as from January 2021. 12. A bank loan, $25,000 taken out in 2019 will be repaid in full in January 2021. 13. The balance on the business bank account at 1 November 2020 is expected to be $18,000 positive. REQUIRED Prepare a monthly cash budget for each of the three months from November 2020 to January 2021. [15]