Check Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter a Budgeted monthly absorption costing income statements for July to October are as follows: July 545,000 26.000 19.000 August $75,000 44,000 31.000 September $55,000 32,000 23.000 October $50,000 29.000 21.000 Sales Cost of goods sold Gross margin Selling and administrative expenses Selling expense Asinistrative expenses Total selling and adinistrative expenses Net operating income 8,700 9,000 6.6 7,000 10.600 5.4.400 12700 2700 20,400 $10.600 14,200 $6,500 $ 7,400 "Includes $2 250 depreciation each month Sales are 20% for cash and BON on Credit Prov 1 of 1 HII Nox A exto.mheducation.com/ext/map/index.html?_con=con&external browser-launchuelhttp%253A%252F%252Fnewconnect the docto.com/2528/activity/quest. on 1 Augent ignment #1 V1 Individual First Name Begins with Help Seve 1 Administrative expense" Total selling and administrative expenses Net operating income Check my werk 6.050 15,650 $ 5,150 B.NO 21,300 $11,500 6.900 15.20 $ 8.500 5.70 14,000 $ 8,000 "Includes $2.400 depreciation each month. b. Sales are 20% for cash and 80% on credit c Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% in the month following sale and 20% in the second month following sale. May sales totalled $38.000, and June sales totalled $44.000 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% are paid in the following month Accounts payable for inventory purchases at June 30 total $15.700 e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $22,000. f Land costing $4.900 will be purchased in July g. Dividends of $1,400 will be declared and paid in September h. The cash balance on June 30 is $8.800: the company must maintain a cash balance of at least this amount at the end of each month The company has an agreement with a focal bank that allows it to borrow in increments of $1.000 at the begining of each month. up to a total loan balance of $40,000. 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 July August and September and for the quarter in total
