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: May June July April 434,000 567,000 364,000 294,000 186,000 243,000 156,000 126,000 Sales S 620,000 $ 810,000 $ 520,000 $ 420,000 Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense 82,000 101,000 46,000 61,600 63,000 42,000 38,600 40,000 82,000 80,400 S 54,400 $ 44,000 Total selling and administrative expenses 128,000 162,600 101,600 Net operating income S 58,000 Includes $24,000 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 $230,000, and March's sales totaled $255,000 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 $114,800 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 $86,800 f. Dividends of $31,000 will be declared and paid in April. g. Land costing $39,000 will be purchased for cash in May h. The cash balance at March 31 is $53,000; the company must maintain a cash balance of atleast $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