a Budgeted monthly absorption costing income statements for April-July are April $ 560,000 392,000 168,000 Hay $ 760,000 532,000 228.000 June $ 460,000 322.000 138.000 July $ 350,000 252,800 188,000 Sales Cost of goods sold Gross margin Selling and administrative expenses : Selling expense Administrative expense" Total selling and administrative expenses Net operating income "Includes $18,000 of depreciation each month 76,000 43,000 119.000 $ 49,000 96,000 57,600 153,600 $ 74,400 57,000 35,600 92,600 $ 45, 400 36,000 34,000 20,000 $ 38,000 b. Sales are 20% for cash and 80% on account, cSales on account are collected over a three-month period with 10% collected in the month of sale: 80% collected in the first month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $175,000, and March's sales totaled $230,000 d. Inventory purchases are paid for within 15 days. Therefore 10% 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 $103,600 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 $78.400. 1. Dividends of $26,000 will be declared and paid in April. g. Land costing $34,000 will be purchased for cash in May. h. The cash balance at March 31 is $48,000, the company must maintain a cash balance of at least $40.000 at the end of each month L 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 Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total 2. 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 April May, and June, and for the quarter in total 3. Prepare a cash budget for April May, and June as well as in total for the quarter