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: a. Budgeted monthly absorption costing Income statements for April-July are: April May June July $ 610,000 $300,000 $10,000 $410,000 427,000 560,000 357,000 287,000 183,000 240,000 153,000 123,000 es Sales Cont of goods sola Cross margin Selling and administrative expenses Bolling expense Administrative expenne Total selling and administrative expenses Net operating income includes $23,000 of depreciation each month. 01.000 100,000 61,000 41.000 45,500 60, 800 30,000 39,000 126,500 160, 800 99,000 BO,000 56,500 $ 79,200 $ 54,000 43,000 b. Sales are 20% for cash and 80% on account. c. Sales on account are collected 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% collected in the second month following the month of sale. February's sales totaled $220,000, and March's sales totaled $250,000, alin. There Ala w b. Sales are 20% for cash and 80% on account. Sales on account are collected 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% collected in the second month following the month of sale. February's sales totaled $220,000, and March's sales totaled $250,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's Inventory purchases are pald for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $112,700 e. Each menth's ending Inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise Inventory at March 31 is $85,400. f. Dividends of $30,000 will be declared and paid in April. g. Land costing $38,000 will be purchased for cash in May. h. The cash balance at March 31 is $52,000, the company must maintain a cash balance of at least $40,000 at the end of each month. 1. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of each month, up to a total loan balance of $200,000. The Interest rate on these loans Is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total 2. Prepare the following for merchandise Inventory: a. A merchandise purchases budget for April, May, and June b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. Required 1 Required 2A Required 2B Required 3 Prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June. Merchandise Purchases Budget April May June Total needs Required inventory purchases Required 1 Required 2A Required 28 Required 3 Prepare the following for merchandise Inventory, a schedule of expected cash disbursements for merchandise purchases April, May, and June, and for the quarter in total. Schedule of Expected Cash Disbursements for Merchandise Purchases April May June Quarter April purchases May purchases June purchases Total cash disbursements April Quarter June Beginning cash balance Add collections from customers + Total cash available Less cash disbursements: Purchases for inventory Selling expenses Administrative expenses Land purchases Dividends pald Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayment Interest Total financing Ending cash balance Required 1 Required 39 Required 28 Required 3 Required 2A Prepare a schedule of expectea casn collections for April, May, and June, and for the quarter in total. Schedule of Expected Cash Collections April May June Quarter Cash sales Sales on account: February March April May June Total cash collections Required 2A >