Reference no: EM133103976
Question - Muzza's Magic Shows has provided the following estimates relating to the third quarter of the financial year, the quarter beginning 1 January 2022 and ending 31 March 2022:
Cash Sales $368,000
Administration paid $112,800
Depreciation of furniture $2,520
Payment to Creditors $423,200
Credit Sales $739,200
Credit Purchases $262,400
Office Furniture purchased $100,800
Receipts from Debtors $572,000
Receipt of Loan $120,000
Utilities paid $30,400
Wages paid $432,000
The cash balance at 1 January 2022 is expected to be $90,000.
Required -
1. Prepare a Cash Budget for the quarter ending 31 March 2022.
2. Based on your Cash Budget, comment on whether the business can afford to purchase a vehicle for $55,000 during this quarter.