Garden Sales, Inc sells 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 April to July are as follows Sales Cost of goods sold Gross margin Less: Operating expenses: Selling expense Administrative expense Total operating expenses Net income April $600,000 456,000 224,000 May $920,000 July $600,000 $520,000 624,000 420,000 364,000 295,000 180,000 156,000 June 103,200 136,000 56,000 73,600 159,200 209,600 122,400 $64,800 $86,400 69,600 60,800 52,000 50,000 131,200 $57,600 544,800 "Includes $10,000 in depreciation each month D b. Sales are 20% for cash end 80% on account c Sales on account are collected over a three-month period in the following ratio, 10% collected in the month of sale, 70% collected in the first month following the month of sole, and the remaining 20% collected in the second month followmg the month of sale February's sales totalled $360,000, and March's sales totalled $440,000 d. Inventory purchases are paid for within 15 days. Therefore, 50% of a moners inventory purchases are paid for in the month of purchase. The remaining 50% are paid in the following month Accounts payable at March 31 for inventory purchases thuring March total $124,800 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 month. The merchandise inventory at March 31 is $91,200 Dividends of $69,200 will be declared and paid in April g Equipment costing $22.800 will be purchased for cash in May h. The cash balance at March 31 is $61 600 the company must maintain a cash balance of ot least $49.000 at all times The company can borrow from its bank, as needed, to bolster the cash account Borrowings and repayments must be as mutiples of $500 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 rote is 12% Compute interest on whole months 12. 2/12, and so forth audi interesat 126 Compute eest on wie mus (12, 212, and so 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 GARDEN SALES, INC. Schedule of Expected Cash Collections Cash sales Sales on account February March April May April May June Quarter June Total cash collections $ 0 $ 0 $ 0 $ 0 2. Prepare the following for merchandise inventory a. An inventory purchases budget for each of the months April, May, and June. GARDEN SALES, INC. Inventory Purchases Budget April May June 2. Prepare the following for merchandise inventory. a. An inventory purchases budget for each of the months April, May, and June. Total needs GARDEN SALES, INC. Inventory Purchases Budget April May 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. GARDEN SALES, INC. Schedule of Expected Cash Disbursements for Inventory Accounts payable, March 31 April purchases May purchases June purchases April May June Quarter b. A schedule of expected cash disbursements for inventory for each of the months April, May, and June, and for the quarter in total GARDEN SALES, INC. Schedule of Expected Cash Disbursements for Inventory April May June Quarter Accounts payable, March 31 April purchases May purchases June purchases Total cash disbursements $ 0 $ 0 $ 3. Prepare a cash budget for the third quarter by month as well as in totel 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) GARDEN SALES, INC. Cash Budget For the Quarter Ended June 30 Total cash avaliable Deduct Disbursements April May June Quarter 0 of Saved 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.) GARDEN SALES, INC. Cash Budget For the Quarter Ended June 30 Total cash available Deduct Disbursements Total disbursements Excess (deficiency) of cash Financing Total financing April 0 May June Quarter 0 0 0