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:

1. Budgeted monthly absorption costing income statements for April-July are:

April May June July Sales $650,000 $1,150,000 $610,000 $520,000 Cost of goods sold 455,000 805,000 427,000 364,000 Gross margin 195,000 345,000 183,000 156,000 Selling and administrative expenses: Selling expense 121,000 110,000 72,000 52,000 Administrative expense* 50,500 68,800 44,600 49,000 Total selling and administrative expenses 171,500 178,800 116,600 101,000 Net operating income $ 23,500 $ 155.200 $ 65.400 $ 55.900