The Chinkin Corporation produces surfboards. Its sales have been 300 a month for the last few months but it is about to launch an expansion strategy aimed at increasing sales by 50% over the next four months, April to July. Sales in April are expected to be 300 boards but to increase by 50 units a month until 450 units are sold in July and each subsequent month. The selling price of the boards is £50 and half the customers pay in the month following purchase. One-quarter take two months to pay and the other quarter pay cash on delivery, taking advantage of a 5% cash discount. Chinkin has planned an advertising campaign for the months of April, May and June, costing a total of £40,000. Half this amount is payable in April and the remainder in two equal instalments in May and June. To facilitate the increase in production, new plant and equipment costing £18,000 have been ordered for delivery in April, with payment in three equal monthly instalments, commencing in May. The cost of commissioning this machinery is estimated at £2,000 and will be paid to the outside contractors in April. To lessen the impact of acquiring these fixed assets, Chinkin plans to arrange a three-month loan of £20,000 from its bank and expects to pay interest at the rate of 10% per annum. The interest will be paid in one amount on the same day as the capital sum is repaid. The money is to be transferred into its account on 3 April. Raw materials cost £20 a unit and are paid for one month after purchase. Chinkin plans to have a monthly opening stock of raw materials equal to each month’s production requirements. Similarly, its policy regarding stocks of finished boards is to have a monthly opening stock equal to each month’s total sales. Monthly fixed costs, including depreciation of £600, total £6,200 and are paid for in the month incurred. The opening bank balance for April is expected to be £11,400 positive. Chinkin’s current overdraft limit is £25,000.

Task:
Create Chinkin’s monthly cash budget for the four-month period April to July and for the four-month period as a whole (work to the nearest £). Advise the corporation accordingly.