April $570,000 $770,000 $470,000 $370,000 399,000 July ay June Sales 539,000 329,000 259,000 Cost of qoods sold 171,000 231,000 141,000 111,000 Gross marqin Selling and administrative expenses Selling ex Administrative expense 77,000 43,500 97,000 58,400 58,000 36,200 37,000 35,000 Total selling and administrative expenses 120,500 155,400 94,200 72,000 Net operating income 50,500 $ 75,600 46,800 39,000 Includes $19,000 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; 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 $185,000, and March's sales tootaled $235,000. 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 $105.700. 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 $79,800. Dividends of $27,000 will be declared and paid in April g. Land costing $35,000 will be purchased for cash in May. h. The cash balance at March 31 Is $49.000: 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 $200,000. The interest rate on these loans is 1 % per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total 3. Prepare a cash budget for April, May, and June as well as in total for the quarter Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2A 2B 3 Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. Schedule of Expected Cash Collections April May June Quarter Cash sales Sales on account February March 0 April May June Total cash collections 0S 0$ S S
