a. Budgeted monthly absorption costing income statements for April-July are: s , April May June July Sales $ 600,000 $ 900,000 $ 500,000 $ 400,000 Cost of goods sold 420,000 630,000 350,000 280,000 Gross margin 180,000 270,000 150,000 120,000 Selling and administrative expenses: Selling expense 79,000 120,000 62,000 51,000 Administrative expensex 45,000 52,000 41,000 38,000 Total selling and administrative expenses 124,000 172,000 103,000 89,000 Net operating income $ 56,000 $ 98,000 $ 47,000 $ 31,000 *Includes $20,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. 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 $200,000, and March's sales totaled $300,000. 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 $126,000. 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 31is $84,000. f. Dividends of $49,000 will be declared and paid in April. g. Land costing $16,000 will be purchased for cash in May. h. The cash balance at March 31is $52,000: the company must maintain a cash balance of at least $40,000 at the end of each month. i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the S A