Required:
(a) Prepare a report to the directors of Blue Jays showing the effect on the cash flows of Blue Jays on a month by month basis if the company:
(i) delays payments to creditors in respect of January, February and March wool purchases.
(ii) offers discounts to trade debtors in respect of January, February and March sales.
(b) Provide summary cash flow budgets for the period 1st January to 30th June 2014 under each of the following alternative scenarios:
? Delay of payments to creditors
? Offering of discounts to trade debtors
? Both delayed payments to creditors and discounts to debtors
? No change is made from existing policy
(c) Advise whether the delaying of payments to creditors or the offering of discounts to debtors is worthwhile. In your advice to the directors, discuss any matters not included in (a) and (b) above which they should consider in arriving at their decision on whether to temporarily change their existing policies relating to trade creditors and trade debtors.
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