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

	April			May			June			July
Sales	$	490,000		$	1,020,000		$	470,000		$	370,000
Cost of goods sold		343,000			714,000			329,000			259,000
Gross margin		147,000			306,000			141,000			111,000
Selling and administrative expenses:
Selling expense		95,000			97,000			58,000			37,000
Administrative expense*		43,500			58,400			36,200			35,000
Total selling and administrative expenses		138,500			155,400			94,200			72,000
Net operating income	$	8,500		$	150,600		$	46,800		$	39,000

*Includes $19,000 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 $185,000, and Marchs sales totaled $235,000.
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 $100,100.
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 $68,600.
6. Dividends of $27,000 will be declared and paid in April.
7. Land costing $35,000 will be purchased for cash in May.
8. The cash balance at March 31 is $49,000; 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 $68,600 and accounts payable for inventory purchases at March 31 remains $100,100.

Using the presidents new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Need help making the corrections

Garden Sales, Inc. Cash Budget For the Quarter Ended June 30 April May June Quarter Beginning cash balance $ 49,000 $ 40,000 $ 40,000 $ 49,000 Add collections from customers 298,400 X 597,600 781,200 1,677,200 X Total cash available 347,400 637,600 821,200 1,726,200 Less cash disbursements: Purchases for inventory 308,700 X 527,100 X 476,000 X 1,311,800 Selling expenses 95,000 97,000 58,000 250,000 Administrative expenses 24,500 39,400 17,200 81,100 Land purchases 35,000 35,000 Dividends paid 27,000 27,000 Total cash disbursements 455,200 698,500 551,200 1,704,900 Excess (deficiency) of cash available over disbursements (107,800) (60,900) 270,000 21,300 Financing Borrowings 147,800 100,900 248,700 Repayments (248,700) X (248,700) Interest (6,452) X (6,452) Total financing 147,800 100,900 (255,152) (6,452) Ending cash balance $ 40,000 $ 40,000 14,848 14,848