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 216,000 April May June $660,000 $900,000 $580,000 444,000 612,000 406,000 288,000 July $500,000 350,000 174,000 150,000 Less: Operating expenses: Selling expense 99,200 132,000 67,600 58,800 Administrative expense* Total operating expenses Net income 54,000 72,000 50,800 48,400 153,200 204,000 118,400 107,200 $ 62,800 $ 84,000 $ 55,600 $ 42,800 *Includes $12,000 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: 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 totalled $340,000, and March's sales totalled $420,000. 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% are paid in the following month. Accounts payable at March 31 for Inventory purchases during March total $122,400. 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 $88,800. f. Dividends of $67,800 will be declared and paid in April. g. Equipment costing $21,800 will be purchased for cash in May. h. The cash balance at March 31 is $59,600; the company must maintain a cash balance of at least $47,000 at all times. I. The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples 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 rate is 12%. Compute Interest on whole months (1/12, 2/12, and so forth).