April	May	June	Quarter
Cash sales				0
Sales on account:
February				0
March				0
April				0
May				0
June Total Cash Collection

Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:

1. Budgeted monthly absorption costing income statements for AprilJuly are:

	April			May			June			July
Sales	$	430,000		$	960,000		$	410,000		$	310,000
Cost of goods sold		301,000			672,000			287,000			217,000
Gross margin		129,000			288,000			123,000			93,000
Selling and administrative expenses:
Selling expense		83,000			91,000			52,000			31,000
Administrative expense*		40,500			53,600			32,600			29,000
Total selling and administrative expenses		123,500			144,600			84,600			60,000
Net operating income	$	5,500		$	143,400		$	38,400		$	33,000

*Includes $13,000 of depreciation each month.

2. Sales are 20% for cash and 80% on account.
3. 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. Februarys sales totaled $145,000, and Marchs sales totaled $205,000.
4. Inventory purchases are paid for within 15 days. Therefore, 50% of a months 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 $87,500.
5. Each months 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 $60,200.
6. Dividends of $21,000 will be declared and paid in April.
7. Land costing $29,000 will be purchased for cash in May.
8. The cash balance at March 31 is $43,000; the company must maintain a cash balance of atleast $40,000 at the end of each month.
9. 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.

The companys president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:

1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.

2. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $60,200 and accounts payable for inventory purchases at March 31 remains $87,500.

1. Using the presidents new assumptions in (1) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.

Garden Sales, Inc, seils garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter a Budgeted monthly absorption couing income statements for April-July are: Cost of goods sold Grossman Song anda Selling pente Anna Tolering date Nel penting Indudes $13.000 of depreciation each month D. Sales are 20% for cash and 80% on account Sales on account are collected over a three-month period with 10% collected in the month of sale: 70% colected in the first month following the month of sale, and the romaining 20% collected in the second month folowing the month of sale. February sales totaled $145.000, and March's sales totaled $205.000 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% paid in the following months Accounts payable at March 31 for inventory purchases during March total 587,500 e. Each month's ending inventory mustequal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory of March 31 is $80.200. I Dividends of 521.000 will be declared and paid in April Land costing $29.000 will be purchased for cash in May . The cash balance at March 31 is $43,000, the company must maintain a cash balance of atleast 540.000 at the end of each month. 1. The company has an agreement with a local bank that ows 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 ropay the loan plus accumulated interest at the end of the quarter The company's president is interested in knowing how reducing inventoey levels and collecting accounts receivable sooner will impact the cash budol. He revises the cash collection and ending inventory assumptions as follows 1. Sales continue to be 20% for cash and 80% on credit. However, credit sales from Apri May, and June are colected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section 2. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $60.200 and accounts payable for inventory purchases at March 31 remains $87.500 Required: 1. Using the president's new assumptions (1) above, prepare a schedule of expected cash collections for April May, and June and for the quarter in total