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Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning

its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support

peak sales of back$-$to$-$school materials, which occur during August. The following information has been assembled to assist in

preparing a cash budget for the quarter:

a$.$ Budgeted monthly absorption costing income statements for July to October are as follows:

Sales

Cost of goods sold

Gross margin

Selling and administrative expenses:

Selling expense

Administrative expense$*$

Total selling and administrative expenses

Net operating income

$*$Includes $$2,000$ depreciation each month.

b$.$ Sales are $20\%$ for cash and $80\%$ on credit.

July

$$40,000$

$24,000$

Q Search

$16,000$

PRE

$7,200$

$5\mathrm{.}600$

$12,800$

$ $3,200$

August

$$70,000$

$42,000$

$28,000$

$11,700$

$7\mathrm{.}200$

$18,900$

$$9,100$

September

$$50,000$

$30,000$

$20,000$

$8,500$

$6\mathrm{.}100$

$14\mathrm{.}600$

$$5,400$

c$.$ Credit sales are collected over a three$-$month period, with $10\%$ collected in the month of sale, $70\%$ in the month following

sale, and $20\%$ in the second month following sale. May sales totalled $$30,000,$ and June sales totalled $$36,000.$

d$.$ Inventory purchases are paid for within $15$ days. Therefore, $50\%$ of a month's inventory purchases are paid for in the mon

of purchase. The remaining $50\%$ are paid in the following month. Accounts payable for inventory purchases at June $30$ total

$$11,700.$

October

$$45,000$

$27,000$

$18,000$

e$.$ The company maintains its ending inventory levels at $75\%$ of the cost of the merchandise to be sold in the following month.

The merchandise inventory at June $30$ is $$18,000.$

$7,300$

$5,900$

$13,200$

$ $4,800$

$42$

ENG

IN

$20$:$47$

$06-12-2023$

xe$.$ The company maintains its ending inventory levels at $75\%$ of the cost of the merchandise to be sold in the following month.

The merchandise inventory at June $30$ is $$18,000.$

f$.$ Land costing $$4,500$ will be purchased in July.

g$.$ Dividends of $$1,000$ will be declared and paid in September.

h$.$ The cash balance on June $30$ is $$8,000$; the company must maintain a cash balance of at least this amount at the end of each

i$.$ The company has an agreement with a local bank that allows it to borrow in increments of $$1,000$ at the beginning of each

month, up to a total loan balance of $$40,000.$ The interest rate on these loans is $1\%$ per month, and for simplicity, we will

assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at

the end of the quarter.

Required:

$1.$ Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total.

$2.$ Prepare the following for merchandise inventory:

a$.$ A merchandise purchases budget for July, August, and September.

b$.$ A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the

quarter in total.

$3.$ Prepare a cash budget for July, August, and September and for the quarter in total.