Compile a cash budget for Blankets Limited for July to December 2026 and clearly indicate any financing costs.

Here's the cash budget for Blankets Limited for July to December 2026 and an overview of its cash flow situation. Question 3a: Compile a cash budget for Blankets Limited for July to December 2026 and clearly indicate any financing costs. Sales Data: March: R280 000 April: R280 000 May: R450 000 June: R560 000 July: R650 000 August: R550 000 September: R300 000 October: R100 000 November: R90 000 December: R50 000 Credit Sales (50% of total sales): March: R140 000 April: R140 000 May: R225 000 June: R280 000 July: R325 000 August: R275 000 September: R150 000 October: R50 000 November: R45 000 December: R25 000 Collection Pattern for Credit Sales: 1 month after sale: 20% 2 months after sale: 50% 3 months after sale: 30% Cash Budget for Blankets Limited (July - December 2026) | Item | July | August | September | October | November | December | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Beginning Cash Balance | R1 000 000 | R460 500 | R483 000 | R534 500 | R549 500 | R467 000 | | Cash Receipts | | | | | | | | Cash Sales (50% of current month) | R325 000 | R275 000 | R150 000 | R50 000 | R45 000 | R25 000 | | Credit Collections: | | | | | | | | 1 month after (20%) | R56 000 | R65 000 | R55 000 | R30 000 | R10 000 | R9 000 | | 2 months after (50%) | R112 500 | R140 000 | R162 500 | R137 500 | R75 000 | R25 000 | | 3 months after (30%) | R42 000 | R67 500 | R84 000 | R97 500 | R82 500 | R45 000 | | Total Cash Receipts | R535 500 | R547 500 | R451 500 | R315 000 | R212 500 | R104 000 | | Total Cash Available | R1 535 500 | R1 008 000 | R934 500 | R849 500 | R762 000 | R571 000 | | Cash Disbursements | | | | | | | | Purchases & Other Exp (50% of sales) | R325 000 | R275 000 | R150 000 | R50 000 | R45 000 | R25 000 | | Fixed Costs | R250 000 | R250 000 | R250 000 | R250 000 | R250 000 | R250 000 | | Staff Bonus | R500 000 | R0 | R0 | R0 | R0 | R0 | | New Equipment | R0 | R0 | R0 | R0 | R0 | R1 000 000 | | Interest on Line of Credit | R0 | R0 | R0 | R0 | R0 | R0 | | Total Cash Disbursements | R1 075 000 | R525 000 | R400 000 | R300 000 | R295 000 | R1 275 000 | | Net Cash Flow | -R539 500 | R22 500 | R51 500 | R15 000 | -R82 500 | -R1 171 000 | | Ending Cash Balance before Financing | R460 500 | R483 000 | R534 500 | R549 500 | R467 000 | -R704 000 | | Financing | | | | | | | | Borrowing (Repayment) | R0 | R0 | R0 | R0 | R0 | R704 000 | | Ending Cash Balance | R460 500 | R483 000 | R534 500 | R549 500 | R467 000 | R0 | | Cumulative Borrowing | R0 | R0 | R0 | R0 | R0 | R704 000 | Question 3b: Provide a brief overview of the company's cash flow situation over the period and provide your opinion on why it varies over the period. The company begins the period with a strong cash balance. In July, a significant cash outflow occurs due to the R500 000 staff bonus, but the initial cash reserves are sufficient to absorb this, leaving a positive ending balance. Cash flow remains positive from August to October as cash receipts from sales outpace regular operating expenses. However, in November, a decline in sales leads to lower cash receipts, resulting in a negative net cash flow for the month, though the company still maintains a positive cash balance. The most critical period is December, where a substantial cash deficit of R704 000 arises. This is primarily driven by the large R1 000 000 payment for new equipment, compounded by very low sales and, consequently, low cash receipts. This deficit necessitates borrowing from the line of credit to maintain a zero ending cash balance. The cash flow varies significantly due to the timing of large, non-recurring disbursements (staff bonus in July, new equipment in December) and the fluctuating sales pattern, particularly the sharp decline in sales towards the end of the year. 3 done, 2 left today. You're making progress.