AM is a trading entity. Purchases are on credit, with 70% paid in the month following the date of purchase and 30% paid

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AM is a trading entity. Purchases are on credit, with 70% paid
in the month following the date of purchase and 30% paid in the
month after that.
Sales are partly on credit and partly for cash. Customers who
receive credit are given 30 days to pay. On average 60% pay
within30 days, 30% pay between 30 and 60 days and 5% pay between 60
and 90 days. The balance is written off as irrecoverable. Other
overheads, including salaries, are paid within the month
incurred.
AM plan to purchase new equipment at the end of June 2015, the
expected cost of which is P250,000. The equipment will be purchases
on 30 days credit, payable at the end of July. The cash balance on
1 May 2015 is P96,000.
The actual/budgeted figures for the six month to July 2015
were:
Required:
a. Prepare a monthly cash budget for the period May to July
2015. (15 marks)
b. Assess the likelihood of AM being able to pay for the
equipment when it falls due. (5 marks)