Greenacres is a garden design and landscaping business. At 30 June 2018, it had a bank balance of $26,500. Provided below are estimates for receipts and payments for the three months ending 30 September 2018.

Required
a. Prepare a monthly cash budget for the three months ending 30 September 2018.
b. The owners were wondering what the effect would be on the cash position if they did not buy the new equipment, but instead took advantage of a new rental arrangement. The equivalent equipment would cost $10,000 per month under the rental arrangement. Redraft the cash budget to show the impact of the rental alternative. Based on the information available, should they lease or buy the equipment?

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Receipts Fees Proceeds from the sale of surplus non-current assets Payments Salaries and wages Supplies New equipment Purchase of plants July $140 000 70 000 8 500 120 000 42 000 August $160 000 100 000 70 000 9200 45 000 September $200 000 70 000 12000 61 000