Question 3(7 marks)

Relevant data from Picta Company's operating budgets are presented below. The company's financial year ends on 30 June.

Additional data:

Equipment was sold in July for $8,000 and $4,500 in November. Dividends of $5,500 were paid in August. The beginning cash balance was $80,395 and a required minimum cash balance per quarter is $60,000.

The company has a 15% open line of credit for $70 000 with their bank.

Required:

a) Use this information to prepare a cash budget for the first two quarters of the year. (5 marks)

bi) Briefly comment on Picta Company's expected cashflow position in the first two quarters of the year. (2 marks)

Sales Direct material purchases Direct la hor Manufacturing overhead Selling and administration expenses Depreciation included in selling and administration expenses Collection from customers Cash payments for purchases Quarter 1 $248,4] 120,295 26,553 26,000 33,560 2,800 230,524 114,845 Quarter 2 $251,539 128,832 24,289 24,4130 33,560 2,500 220,115 1 18,345