3 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 Budgeted monthly absorption costing income statements for April-July are 10 bo 20284 Sales Cost of nods sold Gross margin Selling and dinistrative expenses Selling pense Administrative expense" Total selling and administrative expenses Niet operating Income Apr 11 Hay July $630,000 $1,150,000 $ 590,000 $490,000 44100 291, 42,00 343,000 189.000 339.000 127.000 147.000 117.000 105,00 70,000 49,000 49.500 62.900 3400 42.000 166.500 125 200 113.400 $6,000 $ 32,500 16.500 63,600 51.000 Includes $31.000 of depreciation each month b Sales are 20% for cash and 80% on account Sales on account are collected over a three month period with 10% collected in the months 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 75 and Michelle can 3 totaled $275,000, and March's sales totaled S290,000 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% paid in 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 Inventory at March 31 is $88 200 Dividends of $38,000 will be declared and paid in April 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 cand 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 for it is able repay the loan plus accumulated interest at the end of the quarter 9020 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 An 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 Check my work mode. This 3 following month. The merchandise inventory at March 31 remains $88,200 and accounts payable for inventory purchases at March 31 remains $125,300 10 Det 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 Apol, 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 20 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 28 Required) Required 2A 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 Next > Wyry your 3 Required 1 Required 2A Required 28 Required 3 10 points 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. 8 01:27:44 Schedule of Expected Cash Collections April May June Quarter S 126.0005 22.600 $ 100,000 $ 248,600 * Cash sales Sales on account February March April May June Total cash collections 27,500 188,500 126.000 29.000 327,600 226,000 50,400 587,600 100 000 56,500 566.500 939.600 100,000 0 $ 468,000 $ 605,200 $ 838,000 $ 1,911 200 Required 2A > 3 10 Dots May 40,475 $ 808,6003 849,075 4,000 $ 838,000 842.000 140,4753 2,114,600 2,255,075 01:27:21 Garden Sales Cash Hudget For the arter Laded June 30 April Beginning cash balance $ 6,000 $ Add collections from customers 468,000 Total cash available 474,000 Less cash disbursements Purchases for inventory 361 025 Selling expenses 117,000 Administrative expenses 18.500 Land purchases Dividends paid 38.000 Total cash disbursements 534,525 Excess (deficiency) of cash available over disbursements (60.525) Financing Borrowings 41.000 602.875 100,000 36 200 46,000 563.000 70,000 12.400 1,526,900 287,000 67,100 46.000 38000 1,965 000 290,075 785.075 64,000 645 400 196 600