Pelican Merchandising & More is a family-owned store. The business is now approaching the end of the year and is in the process of identifying its cash needs 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 Mar 31, 2022 Month 2021 - 2022 Cash Sales $ Sales on A/C $ Cash Purchases $ Purchases on A/C $ Nov 2021 138,100 480,000 345,000 Dec 2021 156,500 600,000 25,800 380,000 Jan 2022 170,975 650,000 44,625 400,000 Feb 2022 135,740 700,000 30,400 480,000 Mar 2022 226,420 800,000 55,100 540,000 1 Extracts from the sales and purchases budgets are as follows 2 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 3 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 4 The management of Pelican Merchandising has negotiated with a tenant to sublet office space to her beginning Feb 1. The rental is expected to be $552,000 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 5 Office Furniture & Fixtures, which is estimated to cost $350,000, will be purchased in Feb. The manager has made arrangements with the suppliers to make a cash deposit of 40% upon signing of the agreement in Feb. The balance will be settled in five (5) equal monthly installments beginning Mar 2022 6 The management of Pelican Merchandising is in the process of upgrading its fleet of motor vehicles. During Feb the business expects to sell an old delivery motor van that cost $540,000 at a loss of $34,000 to an employee. Accumulated depreciation on this motor van at that time is expected to be $246,000. The employee will be allowed to pay a deposit equal to 60% of the selling price in February; the balance will be settled in two equal amounts in Mar & Apr 2022 7 Fixed operating expenses which accrue evenly throughout the year, are estimated to be $2,088,000 per annum, which include depreciation on non-current assets of $42,000 per month and are expected to be settled monthly 8 Other operating expenses which accrue evenly throughout the year are expected to be $696,000 per annum and will be settled monthly 9 A long-term bond purchased by Pelican Merchandising 2 years ago, with a face value of $450,000 will mature on Jan 15, 2022. 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 8⅓% per annum is also expected to be collected 10 A compensation payment of $355,000 to a former employee for a back injury sustained in an accident in the business storage facility, not covered by insurance, becomes due and payable on Jan 25, 2022 11 Wages and salaries are expected to be $3,264,000 per annum and will be paid monthly 12 The cash balance on Mar 31, 2022 is expected to be an overdraft of $253,000 Required: c Upon receipt of the budget, the team manager, June Jackson, has now informed you that, in keeping with industry players, the management of Pelican Merchandising has indicated an industry requirement to maintain a minimum cash balance of $185,000 each month. She 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 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.