Check my work Problem 8-25 (Algo) Cash Budget with Supporting Schedules; Changing Assumptions (L08-2, L08-4. LO8-8] Garden Sales. Incorporated 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 $ 460,000 122,000 990,000 093,000 June 140.00 100.000 $10.00 2. 102.000 Sales cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense" Total selling and administrative expenses Net operating income "Includes $16,000 of depreciation each month 29,000 42.000 111,000 $ 2.000 14.000 36.000 150, $147,000 55,00 36,00 9.00 14, 13.000 . b. Sales are 20% for cash and 30% on account c. 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 February's sales totaled $160,000, and March's sales totaled $220,000 d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchase total $93.800 Databases Out of Date Next > 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, 70% collected in the first month following the month of sale, and the remaining 20% collected in the second month folowing the month of sale February's tales totaled $160,000, and March's sales totaled $220,000 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 $93.800 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 $64,400. f Dividends of $24,000 will be declared and paid in April g. Land costing $32,000 will be purchased for cash in May h. The cash balance at March 31 is $46.000, the company must maintain a cash balance of at least $40.000 at the end of each month 1. The company has an agreement with a local bank that allows the company to borrow in increments of S1000 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 company's 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: 3. 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 to 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 b 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 564.400 and accounts payable for inventory wybus 31 remains 593.800 Databases Out of Date Your FIE Next > 2 end of the quarter The company's president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner the cash budget. He revises the cash collection and ending inventory assumptions as follows: 2.5 pour ook a Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May and Jane are collected over the 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 colection percentages specified in the main section b. The company maintains its ending inventory levels for Apr May, and June 15 of the cost of merchandise to be sold in following month. The merchandise inventory of March 31 remains $64.400 and accounts payable for inventory purchases March 31 remains 593,800 tonces Required: 1. Using the president's new assumptions in (o) above, prepare a schedule of expected cash collections for Apr May and une and to the quarter in total 2. Using the president's new assumptions in (b) above, 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 quanin sot 3. Using the president's new assumptions, prepare a cash budget for April May, and June and for the quarter in Complete this question by entering your answers in the tabs below. Head 28 Rowed Required Required Databases Out of Using the president's new assumptions in (a) above, prepare a schedule of expected cash collection for April