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 Sales Cost of goods sold Gross margin Selling and administrative expenses: $ 520,000 720,000 420,000 294,000 126,000 320,000 224,000 96,000 364,000 156,000 504,000 216,000 72,000 41,000 113,000 92,000 54,400 146,400 Selling expense Administrative expense* Total selling and administrative expenses Net operating income 53,000 33,200 86,200 $ 43,000 69,600 $ 39,800 32,000 30,000 62,000 34,000 "Includes $14,000 of depreciation each month 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, 80% collected in the first month following the month of sale, and the remaining 10% collected in the second month following the month of sale. February's sales totaled $150,000, and March's sales totaled $300,000 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% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $120,400 e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventorv at March 31 is $72.800