arden 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: a. Budgeted monthly absorption costing income statements for April-July are: April 350,000 721,000 336,000 266,000 150,000 309,000 144,000 114,000 May June Sales $ 500,000 $1,030,000 480,000 $ 380,000 Cost of goods sold Gross margin Selling and administrative expenses: 97,000 44,000 98,000 59,000 38,000 Selling expense Administrative expense 59,200 36,800 36,000 141,000 157,200 95,800 74,000 $ 9,000 151,800 S 48,200 S 40,000 Total selling and administrative expenses Net operating income "Includes $21,000 of depreciation each month. b. 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% !lected in the first month following the month of sale, and the remaining 20% collected in the second nth following the month of sale. February's sales totaled $195,000, and March's sales totaled $240,000 % 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 $102,200. d. Inventory purchases are paid for within 15 days. Therefore, 50 e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the followi month. The merchandise inventory at March 31 is $70,000. f. Dividends of $28,000 will be declared and paid in April. g. Land costing $36,000 will be purchased for cash in May h. The cash balance at March 31 is $50,000, the company must maintain a cash balance of atleast $40,000