Garden Sales, Inc- sells garden supplies. Management is planning its cash needs for the second quarter. The following information has been assembled to assistin preparing a cash budget for the quarter: a. Budgeted monthly income statements for April to July are as follows: April May June Zlulyr Sales- $4so,ass Names-s $413,300 $333,300 Cost of goods sold 342,300 513,300 232,300 231,300 Gross margin 143,300 223,300 123,300 99,300 Less: Operating expenses: Selling expense 65,200 93,300 53,600 41,300 Administrative expense\" 32,300 41,900 33,300 31,400 Total operating expenses 102,200 139,900 34,400 73,200 Net income $ 45,300 $ 33,100 5 33,600 $ 25,300 *lncludes $20,000 in depreciation each month. b. Sales are 20% for cash and 30% on account. c. Sales on account are collected over a threemonth period in the following ratio: 10% collected in the month of sale, 20% collected in the rst month following the month of sale, and the remaining 20% collected in the second month following the month of sale. February's sales totalled $170,000, and March's sales totalled $250,000. 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 $102,000. e. At the end of each month, inventory must be on hand equal to 20% ofthe cost ofthe merchandise to be sold in the following month. The merchandise inventory at March 31 is $63,400. f. Dividends of $39,900 will be declared and paid in April. g. Equipment costing $13,300 will be purchased for cash in May. h. The cash balance at March 31 is $42,600; the company must maintain a cash balance of at least $30,000 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 forthe duration ofthe time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are made at the end ofa month. The annual interest rate is 12%. Compute interest on whole months W12, 2.02, and so forth}. 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. oashsales -_-_ 3. Prepare a cash budget forthe 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.] Excessmaenwmm ___
