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.