Reference no: EM132553424

Tokyo Traders is in the process of preparing a cash budget for July 2020.

1. All sales are on credit. The company collects 60% in the month following the sale and 40% two months following the sale.
2. All purchases of stock are paid for one month after the purchase.
3. Plant and Equipment costing $70 000 is expected to be acquired and paid for in July.
4. The selling and distribution expenses are $38 000 each month.
5. Administrative expenses are $80 000 per month. This includes $6 000 of depreciation expense.
6. Selling & Distribution and Administrative Expenses are paid in the month they are incurred.
7. The cash balance on 1 July 2020 is $8 000.

The following sales and purchases data in 2020 have been compiled for the preparation of the budget:

                         April                           May                    June                       July

                    $                           $                                      $                       $

Purchases  150 000                 180 000                  170 000            200 000

Sales          400 000                   430 000              420 000            440 000

REQUIRED:

Question 1: Prepare a cash budget for the month of July 2020.