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Varsity Supplies \& Things is a family-owned store. The business is now approaching the end of the year and is desirous of identifying its expected cash inflows and outflows for the first quarter of the new year. You are the management accountant of the entity and have been tasked to prepare the cash budget for the business for the quarter ending March 31, 2023. The following data is available: (i) Extracts from the sales and ourchases budgets are as follows: (ii) An analysis of the records shows that trade receivables (accounts receivable) are settled according to the following credit pattern, in accordance with the credit terms 4/30,n90 : 55% in the month of sale 35% in the first month following the sale 8% in the second month following the sale The remaining 2% is expected to be uncollectible (iii) Accounts payable are settled as follows, in accordance with the credit terms 2/30,n60 : 85% in the month in which the inventory is purchased 15% in the following month (iv) The management of Varsity Supplies \& Things has negotiated with a tenant to sublet office space to her beginning February 1. The rental is expected to be $576,000 per annum. The first month's rent along with one month's safety deposit is expected to be collected on February 1. Thereafter, monthly rental income becomes due at the beginning of each month. (v) Office Furniture \& Fixtures, which is estimated to cost $350,000, will be purchased in February. The manager has made arrangement with the suppliers to make a cash deposit of 40% upon signing of the agreement in February. The balance will be settled in five (5) equal (ix) A long-term bond purchased by Varsity Supplies \& Things two (2) years ago, with a face value of $450,000 will mature on January 15, 2023. To meet the financial obligations of the business, management has decided to liquidate the investment upon maturity. On that date semi-annual interest computed at a rate of 8%% per annum is also expected to be collected (x) As part of its investing activities, the management of Varsity Supplies 8 Things has just concluded an expansion project relating to the business's storage facilities. The project required capital outlay of $1,600,000 and was funded by a loan from a family member, who is a silent partner in the business. $320,000 of the principal along with interest of $35,000 will become due and payable on January 25, 2023. (xi) Wages and salaries are expected to be $3,384,000 per annum and will be paid monthly. (xii) The cash balance on March 31, 2023, is expected to be an overdraft of $248,000 Required: (a) The business needs to have a sense of its future cash infiows and outflows for the quarter and therefore requires the preparation of the following: - A schedule of budgeted cash collections for trade receivables for each of the months January to March. (5 marks) - A schedule of expected cash disbursements for accounts payable for each of the months January to March. (4 marks) - A cash budget, with a total column, for the quarter ending March 31, 2023, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place. ( 25% marks) (b) Another team member who is preparing the Budgeted Balance Sheet for the business for the same quarter ending March 31, 2023 and has asked you to furnish him with the figures for the expected trade recelvables and payables to be included in the statement. Is that a reasonable request? If yes, what should these amounts be? (2 marks) (c) Upon receipt of the budget, the team manager, Damion Brownie, has now informed you that, in keeping with industry players, the management of Varsity Supplies \& Things have indicated an industry requirement to maintain a minimum cash balance of $162,000 each month. He has also noted that management is very keen on keeping the gearing ratio of the business as low as possible and would therefore prefer to cushion any gaps internally using equity financing. Based on the budget prepared, will the business be achieving this desired target? Suggest three (3) internal strategies that may be employed by management to improve the organization's monthly cash flow and militate against or reduce any possible shortfall reflected in the budget prepared. Each strategy must be fully explained. (3\%/2 marks)

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