Garden Sales, Inc, sefls garden supplies. Management is planning its cash needs for the second quarter. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly income statements for Aprill to July are as follows: Thcludes $16,000 in depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three month period in the following ratio fo\% collected in the month of sale, 70% collected in the first month following the month of sale, and the remaining 208 collected in the second month following the month of sale. February's sales totalled $210,000, and March's sales totalled $290,000. d. Inventory purchases are paid for whthin 15 days. Therefore, 50s of a month's inventory purchases are paid for in the mionth of purchase. The remaining 50% are paid in the following month. Accounts peyable at March 31 for inventory purchases during March total 5106,800 . e. At the end of each month, inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following morth. The merchandise inventory at March 31 is 573,200 f. Dividends of $42,700 will be deciared and paid in Aprit. 9. Equipment costing $15,300 will be purchased for cash in May. h. The cash balance at March 31 is 546,600 , the compary must maintain a cash balance of at least 334,000 at all times. 1. The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples of 5500. Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12%. Compute interest on whole months (1/2,2/12, and so forth). Reguired: 1. Prepare a schedule of expected cash collections from sales for each of the months April, May, and June, and for the quarter in total. Required: 1. Prepare a schedule of expected cash collections from sales for each of the months April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. An inventory purchases budget for each of the months Apri, Moy, and June. a. An inventory purchases budget for each of the months April, May, and June. b. A schedule of expected cash disbursements for inventory for each of the months April, May, and June, and for the quarter in total. 3. Prepare a cash budget for the third quarter, by month as well as in total for the quarter. Show borrowings from the company's bank and repayments to the bank, as needed, to maintain the minimum cash balance. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.)
