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:

	April		May		June		July
Sales	$	590,000	$	790,000	$	490,000	$	390,000
Cost of goods sold		413,000		553,000		343,000		273,000
Gross margin		177,000		237,000		147,000		117,000
Selling and administrative expenses:
Selling expense		80,000		99,000		60,000		39,000
Administrative expense*		44,500		60,000		37,400		37,000
Total selling and administrative expenses		124,500		159,000		97,400		76,000
Net operating income	$	52,500	$	78,000	$	49,600	$	41,000

*Includes $22,000 of depreciation each month.

a.	Budgeted monthly absorption costing income statements for AprilJuly are:

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. Februarys sales totaled $205,000, and Marchs sales totaled $245,000.
d.	Inventory purchases are paid for within 15 days. Therefore, 50% of a months 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 $109,900.
e.	Each months 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 $82,600.
f.	Dividends of $29,000 will be declared and paid in April.
g.	Land costing $37,000 will be purchased for cash in May.
h.	The cash balance at March 31 is $51,000; the company must maintain a cash balance of atleast $40,000 at the end of each month.
i.	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.