3 a. Budgeted monthly absorption costing income statements for April-July are 10 points April May June July $ 60,000 $1,130,000 $500,000 $400,000 181 000 791000 413000 340.000 100,000 319,000 127.000 147,000 Swope Sales Cost of goods sold Gross margin Selling and administrative expenses Selling expense Administrative expense Total selling and administrative expenses Net operating incone 117,00 49,500 166.500 5:22.00 108,000 78,000 49,000 67,200 43,400 47000 175/200 113.400 96,000 169,800 $ 63,600 51.000 References "Includes $31000 of depreciation each month, b. Sales are 2005 for cash and 80% on account Sales on account are collected over a three-month period with 10% collected in the month of sale: 70% collected in the first inont following the month of sales and the remaining 200 collected in the second month following the month of sale February's sales totaled $275,000, and March's sales totaled $290 000 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 paldin the following month Accounts payable at March 31 for inventory purchases during March total $125,300. e Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise invertory at March 31 is $88.200 1 Dividends of $38.000 will be declared and patch April Check my 3 g Land costing $46,000 will be purchased for cash in May. h. The cash balance at March 31 is $60,000, the company must maintain a cash balance of at least $40,000 at the end of each month 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 10 points Skip 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: Perences 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 3t remains 588 200 and accounts payable for invertory purchases at March 31 remains $125,300. Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for Apr May, and one 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 June A schedule of expected cash disbursements for merchandise Durchases for Apr May and June and for the quarter total . 3 3. Using the president's new assumptions, prepare a cash budget for April May, and June, and for the quarter in total Complete this question by entering your answers in the tabs below. 10 points Suo Required 1 Required 2A Required 28 Required References 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. Cast Budget For the Quarto FridedJune 30 April Muy June Duarter Beginning cash balance Add collections from customers Total cash available Les cash disbursements Purchases for inventory Seting expenses TO B Required 1 Required 2A Required 28 Required 3 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. Schedule of Expected Cash Collections April May June oped Quarter $ 0 D 0 Cash sales Sales on account February March April May June Total cash collections D 0 0 $ 05 0 $ 0$ 0 Required 2A > 3 Required 1 Required 2A Required 28 Required 3 Using the president's new assumptions in (b) above, prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June. 10 points Skepped Merchandise Purchases Budget April May June References 0 0 Total needs $ 0 $ OS 0 Required Inventory purchases 3 May June Quarter 10 points 0 0 0 Skipped References Co udget For the Quarter Ended June 30 April Beginning cash balance Add collections from customers Total cash available Less cash disbursements Purchases for inventory Selling expenses Administrative expenses Land purchases Dividends paid Total cash disbursements 0 Excess (deficiency) of cash available over disbursements 0 Financing Borrowings Repayment Interest Total financing Ending cash balance 0 0 0 0 0 0 0 0 0 05 05