Question 36 (10 points) a) After examining the information supplied by you and their accountant, Emma and Nick decide they need to be more proactive in managing their cash flow and have asked you to prepare a cash budget for the next two months (July and August) to show them how to do it. They have provided the following information to help you. The next 3 months are projected to be Lazaridis' biggest sales months of the year. Sales for the previous 3 months (April, May, and June) were $30,000 per month, and they have projected sales for July and August of $80,000 per month, and $140,000 for September. Last year 50% of its customers paid either in cash or within the month of sale, 20% paid in the month following sale, and 30% paid in the 2nd month following sale. They believe that this year will be similar. Inventory purchases are 50% of next month's sales. Last year the company paid for 40% of its purchases in the month of purchase and the remaining 60% in the month following purchase. dar Emma and Nick plan to spend $7,500 of their marketing budget (or $2,500 per month in July, August, and September) to advertise through these heavy sales months. Their administrative expenses (including payroll) are evenly incurred over the year at $6,250 per month. Income taxes calculated on the recent income statement of $4,100 are due July 15th. Mortgage payments on the building are $3,000 per month, including interest. Emma and Nick do not want their cash balance to go below what it is right now ($3,000 as of June 30th, 2021). Their bank is willing to provide a line of credit at a rate of 7% annual interest. If they need to use this line of credit, they intend to withdraw from it at the beginning of the month when necessary, pay interest on the outstanding balance at the beginning of the next month, and pay down the line of credit whenever possible. As per the balance sheet, there is no outstanding balance on the credit line currently. NOTE: All amounts should be rounded up to the nearest dollar for the purposes of preparing the cash budget. Cash Budget I b) Emma and Nick would also like to know how quickly they are using their cash, and how long their current balance would cover them. Calculate their net cash burn/build rate and 'runway' in order to help them out