3 0136.08 Garden Sales, Incorporated, 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 Book Wint Sen ences Sales Cost of goods sold Gross margin Selling and administrative expenses Selling expense Administrative expense Total selling and administrative expenses Net operating income "Includes $21,000 of depreciation each month b. Sales are 20% for cash and 80% on account. April $580,000 Hay $780,000 June $ 400,000 400,000 546,000 200,000 174,000 234,000 120.000 July $380,000 266,000 114,000) 78,000 98,000 59,000 38,000 44,000 59,200 36,000 35,000 122,000 157,200 95,800 74,000 $ 52,000 $76,000 $ 24,200 $40,000 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 $195,000, and March's sales totaled $240.000 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 $107,800. < Prev 3 of 3 Next