Kath and Kim wish to prepare a budget for the two months ending 30 September 2013 for a gift shop operating as 'Gifts Galore'. The following information is provided.

€¢ Sixty percent of sales are collected in the month of sale and forty percent in the month following the sale.
€¢ Inventory is paid for in the month following delivery. Inventory on hand is kept to a minimum.
€¢ The expenses are paid in the month when they are incurred. Depreciation is $5000 per month.
€¢ Kath and Kim are planning to refurbish the shop at an estimated cost of $50 000. $10 000 will be paid as a deposit in August and the balance will be paid in September, when the work is completed.
€¢ Shivani and Shilo each take out $4000 in cash per month for personal use.
€¢ The bank balance on the 1 August 2008 is $18 000.
Required:
a) Prepare a schedule showing collections from debtors for August and September 2013.
b) Prepare a cash budget for 'Gifts Galore' showing the monthly balances for August and September 2013.
c) On 30 September 2013 a loan of $100 000 is due for repayment. Will Kath and Kim be able to repay the loan when it falls due? Explain.
d) Assuming that Kath and Kim will not have sufficient cash to repay the loan, list three suggestions of things they could do to improve their liquidity.

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Actual credit sales Actual inventory purchases on credit Actual Expenses (including depreciation) S95 000 S105 000 Estimated Expenses (including 2013 June $600 000 S400 000 July S625 000 S470 000 Estimated Estimated inventory purchases on credit $295 000 S380 000 2013 credit sales epreciation) S82 000 81 000 August $520 000 September S480 000