Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usualy 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: Sales 710,000 $ 880,000 $ 590,000 $490,000 497,000 616,000 413,000 343,000 Cost of goods sold Gross margin Selling and administrative expenses: 213,000 264,000 177,000 147,000 Selling expense Administrative expense* 89,000 108,000 70,000 49,000 49,500 67,200 43,400 47,000 138,500 175,200 113,400 96,000 $ 74,500 88,800 S 63,600 $ 51,000 Total selling and administrative expenses Net operating income Includes $31,000 of depreciation each month b, Sales are 20% for cash and 80% on account. c. Sales on acount are colected 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% colected in the second month following the month of sale. February's sales totaled $275,000, and March's sales totaled purchases are paid for within 1 5 days. Therefore, 50% of a more's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the folowing month Aco nts payable at March 31 for inventory purchases during March total $130,900 e. Each month's ending inventory must equal 20% of the oost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $99,400 f. Dividends of $38,000 will be declared and paid in April g. Land costing $46,000 will be purchased for cash in May 30 F6 2 3 4