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Question - Stephen's Exotic Snails has provided the following estimates relating to the first quarter of the financial year, the quarter beginning 1 July 2020 and ending 30 September 2020:
Cash Sales $75.000 Credit Sales $50.000 Receipts from Debtors $60.000 Wages paid $55.000 Rent paid $20.000 Utilities paid $9,000 Administration paid $15.000 Depreciation of machinery $5,000 Receipt of Loan $35.000 Credit Purchases $65,000 Payment to Creditors $70.000
The cash balance at 1 July 2020 is expected to be $10,500.
Required -
(i) Prepare a Cash Budget for the quarter ending 30 September 2020.
(ii) Based on your Cash Budget, comment on whether the business can afford to purchase a new delivery vehicle for $25,000 during this quarter.
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