Question two a) Define the term cash budget, examine its focus and the accounting principle which it disregards. (5 marks) b) Explain the importance of a cash budget. (5 marks) Penelope Jones has been trading as a producer of delicious preserves for several months. Her current account bank balance at 31"July 2019 is expected to be 8,200, but she anticipates capital expenditure in August 2019, which will reduce her bank balance substantially. Details of her budgeted data are shown below. June 2019 July 2019 August 2019 September 2019 Credit Sales 17,800 16,600 19,000 I Purchases Wages Expenses Capital expenditure 8,400 4,600 2,100 4,000 10,200 4,700 2,160 9,600 4,600 2,140 9,000 9,800 4,800 2,180 Anticipated timings for cash receipts and cash payments are as follows: 60% of credit sales are received in the month after sale; the remaining 40% of credit sales are received two months after sale Purchases are paid in the month after purchase Wages are paid immediately Expenses are paid in the following month, and include 400 per month of depreciation Capital expenditure is paid in the same month as budgeted Required c) Prepare Penelope's cash budget for August 2019 and September 2019 in two separate columns. You should also show a totals column. (15 marks) Total 25 marks