1 Splotch’n’ Stuff is a craft dealer that supplies art and craft materials to schools and other groups. The owner-manager wishes to prepare a forecast cash flow statement for the months of July to September.

Half of all sales are for cash, 40% are collected in the next month, and 10% are collected in the second month following the sales. Actual sales in May and June were $60 000, while projected sales are $100 000 in July, $60 000 in August, and

$80 000 in each of September and October.

Purchases are equal to 60% of next month’s sales, and are paid for in the month following the purchase. Rent is $4 000 per month, power and telephone are $500 per month, and other administrative expenses are $1 000 per month. Salaries and wages are $12 000 per month, loan repayments are $4 500 per month, goods and services tax (GST) of $1 000 is due in August, and provisional tax of $6 000 is due in September.

At 1 July, the firm has a bank overdraft of $3 000.

Prepare a forecast cash flow statement for the months of July, August and September. Indicate how much financing will be required, or excess funds available for investment, for July, August and September.