4 14 points Problem 7-5 Preparing a Cash Budget with Supporting Schedules (LO2- CC5, 7, 12) Garden Sales, Inc. sells garden supplies. Management is planning its cash needs for the second quarter. The following information hos been assembled to assist in preparing a cash budget for the quarter. a Budgeted monthly income statements for April to July are as follows: April May June July Sales $580,000 $820,000 $500,000 $420,000 Cost of goods sold 395,000 564,000 350,000 294,000 Gross margin 184,000 256,000 150,000 126,000 Less: Operating expenses! Selling expense 83,200 116,000 59,600 50.800 Administrative expenses 45,000 51,500 42.800 40,400 Total operating expenses 129200 162660 102400 91,200 Net income $ 54,800 5 88,400 $ 47,600 $ 34,800 ebook Pit References includes $10,000 in depreciation each month b Sales are 20% for cash and 80% on account. Sales on account are collected over a three month period in the following ratio: 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 totalled $260,000, and March's sales totalled $340,000 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% are paid in the following month. Accounts payable at March 31 for inventory purchases during March total $112.800 e. At the end of each month, Inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $79,200 Dividends of $47.200 will be declared and paid in April g Equipment costing $17,800 will be purchased for cash in May. h. The cash balance at March 31 is $51,600; the company must maintain a cash balance of at least $39,000 at all times. The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples of $500. Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings toke place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12%. Compute interest on whole months (V12. 2/12, and so forth), Required: . Mc 4 14 points Problem 7-5 Preparing a Cash Budget with Supporting Schedules (LO2- CC5, 7, 12) Garden Sales, Inc. sells garden supplies. Management is planning its cash needs for the second quarter. The following information hos been assembled to assist in preparing a cash budget for the quarter. a Budgeted monthly income statements for April to July are as follows: April May June July Sales $580,000 $820,000 $500,000 $420,000 Cost of goods sold 395,000 564,000 350,000 294,000 Gross margin 184,000 256,000 150,000 126,000 Less: Operating expenses! Selling expense 83,200 116,000 59,600 50.800 Administrative expenses 45,000 51,500 42.800 40,400 Total operating expenses 129200 162660 102400 91,200 Net income $ 54,800 5 88,400 $ 47,600 $ 34,800 ebook Pit References includes $10,000 in depreciation each month b Sales are 20% for cash and 80% on account. Sales on account are collected over a three month period in the following ratio: 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 totalled $260,000, and March's sales totalled $340,000 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% are paid in the following month. Accounts payable at March 31 for inventory purchases during March total $112.800 e. At the end of each month, Inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $79,200 Dividends of $47.200 will be declared and paid in April g Equipment costing $17,800 will be purchased for cash in May. h. The cash balance at March 31 is $51,600; the company must maintain a cash balance of at least $39,000 at all times. The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples of $500. Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings toke place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12%. Compute interest on whole months (V12. 2/12, and so forth), Required: . Mc