er 8 Graded Problems Saved Help en supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money has been assembled to assist in preparing a cash budget for the quarter: during this quarter to support peak sales of lawn care equipment, which occur during May. The following information a. Budgeted monthly absorption costing income statements for April-July are: Apr Sales Cost of goods sold Gross margin Selling and administrative expenses: 600,000 900,000 500,000 $400,000 420,000 630,000 350,000 280,000 180,000 270,000 150,000 120,000 ook Selling expense 79,000 120,000 62,000 51,000 38,000 89,000 56,000 98,000 47,000 31,000 rint Administrative expense* Total selling and administrative expenses Net operating income 45,000 52,000 124,000 172,000 103,000 41,000 "Includes $20,000 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 $200,000, and March's sales totaled $300,000 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 $126,000. 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 $84,000. f Dividends of $49,000 will be declared and paid in April. g. Land costing $16,000 will be purchased for cash in May. h. The cash balance at March 31 Is $52,000; the company must maintain a cash balanc L The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of at least $40,000 at the end of each month. 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