You are the Management Accountant of Cari's shoe store and you are involved in the budgetary process, including operating and financial budgets, for the income year ending December 2020. One component of the financial budget is the cash budget.

The opening cash balance on 1stJanuary was expected to be $30000. The sales budgeted were as follows:

Month

$

November

80000

December

90000

January

75000

February

75000

March

80000

Analysis of records shows that debtors settle in the following pattern:

60%-------------Within the month of sale

25%-------------The month following

15%-------------The month following

Extracts from the purchases budget were as follows:

Month$

December60000

January55000

February45000

March55000

All purchases are on credit and past experience shows that 90% are settled in the month following purchase and the balance settled the month after.

Wages are $15000 per month and overheads are $20000 per month (including $5000 depreciation) are settled monthly.

Taxation of $8000 has to be settled in February and the company will receive settlement of an insurance claim of $25000 in March.

Required:

1. Cash budget for each of the months January, February, and March
2. Cash budget for the period January to March
3. Cari's need to maintain a minimum cash balance of $ 20000. Will Cari's be able to maintain such a minimum balance for each month? If not, what cash management strategy do you recommend and why?