7. (7 points) Ginger Company is preparing its cash budget for the upcoming year. The following items relate to cash collections and cash payments the company anticipates making during the second quarter of the upcoming year. Cash collections from sales as follows: April May June Cash sales $500,000 $510,000 $650,000 Collection on credit sales $850,000 $1,200,000 $1,500,000 The company pays for 40% of its direct materials purchases on in the month of purchase, entitled to a 2% discount and the remainder the following month. The company's direct material purchases for March through June are anticipated to be as follows: March April May June $800,000 $1,000,000 $1,400,000 $1,050,000 Direct labor costs are paid in the month that they are incurred. Direct labor for each month of the second quarter is budget as follows: April May June $500,000 $400,000 $650,000 Manufacturing overhead costs are paid in the month after they are incurred. Manufacturing overhead for March through June are anticipated to be as follows: March April May June Variable manufacturing overhead cost $50,000 $70,000 $65,000 $55,000 Fixed manufacturing overhead cost** $80,000 $80,000 $80,000 $80,000 **Fixed manufacturing overhead costs include depreciation expense - machinery of $10,000 per month. The cash balance as of the first day of the second quarter is $170,000. U Management would like to have a cash balance of at least $200,000 at the beginning of each month for contingencies. Company has an agreement with a local bank that allows the company to borrow in increments of $10,000 at the beginning of each month. The interest rate on these loans is 9% per year, paid on the 1st day of next month. Repayments principle loan are to be made at the ending of a month that forecast cash available more than its minimum. Repayments are made in multiples of $10,000. Required: 1. Prepare the cash payments budget for the second quarter of year 2021, with a column for each month and total for the quarter. 2. Prepare the cash budget for the second quarter of year 2021, with a column for each month and total for the quarter