Amazon.com-Online Sh... A. Garden Sales, Inc., seks garden supplies. Management is planning its cash needs for the seoond quarter The company usually has to borrow money this quarter to supportpeak sales oflawn care equipment, which occur during May. The following informatoehes been assembled to assistin preparing e cash budget for the quarter a Budgeted monthly absorption costing inoome statements for Apri-July are 670,000 840.000 550.000 450.000 Cost of goods sold 469.000 588.000 385.000 315,000 Gross margin 201.000 252.000 165.000 135.000 Selling and administrative expenses Selling expense 85.000 104.000 60.000 45.000 Administrative expense 47.500 64.000 40.400 43.000 Total selling and administrative expenses 132,500 168.000 106,400 88.000 Net operating inoome 08.500 84.000 58.000 47.000 "includes $27,000 of depreciation each month. b. Sales are 20% for cash and 80% on acoount c. Sales on acoount are collected over e three-month period with 10% collected in the month of sales 70% oollected in the first month following the month of sale: and the remaining 20%oollected in the second month following the month of sale. February's sales totaled $255.000, and March'ssales totaled $270,000, 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 during March total $122.500 e. Each month's ending inventory must equal 20% of the cost of the merohandise to be sold in the following month. The merchandise inventory at March 31 is 503 800, f Dividends of $34,000 will be declared and paid in April g. Land costing $42.000 will be purchased for cash in May h The cash balanoe at March 31 is S56,000; the company must maintain a cash balence of steast S40.000 the each month. i The company has an agreement with a local bank that allows the oompany 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 sume 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