1 Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter. a. Budgeted monthly absorption costing income statements for April-July are: April May June July $ 610,000 $1,110,eee $ 570,eee $ 478,000 427,000 777,000 399,000 329,000 183,000 333,eee 171,000 141,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income 113,000 106, eee 68,000 47,600 48.500 65,600 42,200 45,000 161,500 171,600 110, 200 92,600 $ 21,500 $ 161,400 $ 60,800 $ 49,000 *Includes $29,000 of depreciation each month. b. Sales are 20% for cash and 80% on account c. Sales on account are collected over a three-month period with 10% collected in the month of sale: 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled $265,000, and March's sales totaled $280,000 d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $121,100. e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $85.400 f. Dividends of $36,000 will be declared and paid in April 9. Land costing $44,000 will be purchased for cash in May. h. The cash balance at March 31 is $58,000; the company must maintain a cash balance of at least $40,000 at the end of each month. 1. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $200,000. 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 The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: a Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three- month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section b. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $85,400 and accounts payable for inventory purchases at March 31 remains $121100 Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April. May, and June and for the quarter in total 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory a. A merchandise purchases budget for April, May, and June b. A schedule of expected cash disbursements for merchandise purchases for April May, and June and for the quarter in total 3. Using the president's new assumptions, prepare a cash budget for April May, and June, and for the quarter in total Answer is not complete. Complete this question by entering your answers in the tabs below. Required Required 2A Recured 20 Required Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion 1 Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April May, and June and for the quarter in total 2. Using the president's new assumptions in () above, prepare the following for merchandise inventory a. A merchandise purchases budget for April, May, and June b. A schedule of expected cash disbursements for merchandise purchases for April May, and June and for the quarter in total 3. Using the president's new assumptions, prepare a cash budget for April May, and June, and for the quarter in total Answer is not complete Complete this question by entering your answers in the tabs below. Required Roured Required 2A Required 28 Using the president's sumption in (a) bove, prepare a schedule of expected cash collection for Apr May and June and for the quarter in total Schede Expected Cash Cocos 122.000 222.000 114.000 21.300 Cashes Seson February Var Apr wy 21.200 201600 40 100 1000 7.500 21.000 45.600 710.600 Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total. 2 Using the president's new assumptions in (b) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 2B Required 3 Using the president's new assumptions (b) above, prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and Dune. Merchandise Purchases Budget April May June Budgeted cost of goods sold 427.000 777.000 300,000 Add: Desired ending merchandise 155,400 70,800 3 65,800 inventory Total needs 582,400 850.800 404.800 Les Beginning merchandise Inventory 85,400 155,400 3 70,800 3 S Required inventory purchases 407.000 701,400 385.000 3 Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June a the quarter in total 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 28 Required 3 Using the president's new assumptions in (b) above, prepare the following for merchandise inventory, a schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. Schedule of Expected Cash Disbursements for Merchandise Purchases April May June Quarter $ April purchases May purchases June purchases Total cash disbursements OOOOO $ 0 0 S Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory a. A merchandise purchases budget for April, May, and June b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 28 Required 3 Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Garden Sales Inc Cash Budget For the Quarter Ended June 30 April S 122.000 May 222.000 June Quarter 114 000 $ 458.000 122.000 458.000 222.000 114.000 Beginning cash balance Add collections from customers Tot ashable Les cash disbursements Purchases for Inventory Selling expenses Administrative expenses Land purch Dividend paid ext