complete #2 revised cash collection schedule

The company's president is concerned about its ability to borrow money on its line of credit. The bank has indicated they will reduce the total loan balance limit to $100,000. Because of this, the president wants to know how increased collection efforts and reduced inventory levels will impact the cash budget The president suggests that sales continue to be 20% for cash and 80% on credit. However, credit sales for April, May, and June will be 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. This change in policy will not affect collection of sales from February and March. (Assume those are unchanged from your CONNECT problem.) 2) (5 points) Using the president's revised assumptions, complete the revised cash collection schedule below. Because these changes will take effect April 1, all previous months' sales will be collected in accordance with the old policies. (Same as on CONNET) Revised Cash Collection Schedule Collections on Sales: April May June Quarter Cash sales February credit sales: March credit sales: April credit sales: May credit sales: June credit sales: Total cash collections h. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month. i. 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. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. 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 quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. Complete this question by entering your answers in the tabs below. Req! Req2A Req28 Req3 Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total Schedule of Expected Cash Collections April May June $ 130,000 $ 164,000 $ 106,000 Quarter 400,000 S Cash sales Sales on account: February March 39,200 145,600 52,000 April 41.600 364,000 65,600 104.000 39.200 187,200 520,000 524.800 42.400 $ 1,713,600 May June Total cash collections 459,200 42,400 711,600 $ 366,800 $ 635,200 $ 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: a. Budgeted monthly absorption costing income statements for April-July are: April May June July $ 650.000 $ 820,000 $ 530.000 $430,000 455,000 574,000 371,000 301,000 195,000 246,000 159,000 129,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income 83,000 46,500 129,500 65.500 102,000 62,400 164,400 1.600 64.000 39,200 103,200 $ 55,800 43.000 41,000 84,000 $ 45,000 $ $ "Includes $25,000 of depreciation each month. 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 following the month of sale. February's sales totaled $245,000, and March's sales totaled $260,000. 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 $118,300. 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 $91,000. f. Dividends of $32,000 will be declared and paid in April. g. Land costing $40,000 will be purchased for cash in May. h. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month. The company's president is concerned about its ability to borrow money on its line of credit. The bank has indicated they will reduce the total loan balance limit to $100,000. Because of this, the president wants to know how increased collection efforts and reduced inventory levels will impact the cash budget The president suggests that sales continue to be 20% for cash and 80% on credit. However, credit sales for April, May, and June will be 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. This change in policy will not affect collection of sales from February and March. (Assume those are unchanged from your CONNECT problem.) 2) (5 points) Using the president's revised assumptions, complete the revised cash collection schedule below. Because these changes will take effect April 1, all previous months' sales will be collected in accordance with the old policies. (Same as on CONNET) Revised Cash Collection Schedule Collections on Sales: April May June Quarter Cash sales February credit sales: March credit sales: April credit sales: May credit sales: June credit sales: Total cash collections h. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month. i. 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. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. 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 quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. Complete this question by entering your answers in the tabs below. Req! Req2A Req28 Req3 Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total Schedule of Expected Cash Collections April May June $ 130,000 $ 164,000 $ 106,000 Quarter 400,000 S Cash sales Sales on account: February March 39,200 145,600 52,000 April 41.600 364,000 65,600 104.000 39.200 187,200 520,000 524.800 42.400 $ 1,713,600 May June Total cash collections 459,200 42,400 711,600 $ 366,800 $ 635,200 $ 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: a. Budgeted monthly absorption costing income statements for April-July are: April May June July $ 650.000 $ 820,000 $ 530.000 $430,000 455,000 574,000 371,000 301,000 195,000 246,000 159,000 129,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income 83,000 46,500 129,500 65.500 102,000 62,400 164,400 1.600 64.000 39,200 103,200 $ 55,800 43.000 41,000 84,000 $ 45,000 $ $ "Includes $25,000 of depreciation each month. 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 following the month of sale. February's sales totaled $245,000, and March's sales totaled $260,000. 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 $118,300. 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 $91,000. f. Dividends of $32,000 will be declared and paid in April. g. Land costing $40,000 will be purchased for cash in May. h. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month