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:

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: 2.5 points a. Budgeted monthly absorption costing income statements for April-July are: eBook April May June July $ 500,000 $ 700,000 $ 400,000 $300,000 350,000 490,000 280,000 210,000 150,000 210,000 120,000 90,000 Hint Sales Cost of goods sald Gross margin Selling and administrative expenses : Selling expense Administrative expenser Total selling and administrative expenses Net operating income 70,000 90,000 51,000 30,000 40,000 52,800 32,000 28,000 110,000 142,800 83,000 59,000 $ 40,000 $ 67,200 $ 37,000 $32,000 Print "Includes $12,000 of depreciation each month References 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 $140,000, and March's sales totaled $200,000. 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 $91,000 e. Each month'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 $70,000 f. Dividends of $20,000 will be declared and paid in April. g. Land costing $28.000 will be purchased for cash in May. h. The cash balance at March 31 is $42,000; the company must maintain a cash balance of at least $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. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. Complete this question by entering your answers in the tabs below. 2.5 points Required 1 Required 2A Required 2B Required 3 Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) eBook Hint May June Quarter Print 279,200 532,000 532,000 600,000 600,000 0 References 357,000 1,050,000 413,000 80,000 Garden Sales, Inc. Cash Budget For the Quarter Ended June 30 April Beginning cash balance S 42,000 Add collections from customers Total cash available 321,200 Less cash disbursements: Purchases for inventory 280,000 Selling expenses 140,000 Administrative expenses Land purchases 0 Dividends paid 0 Total cash disbursements 420,000 Excess (deficiency) of cash available over disbursements (98,800) Financing: Borrowings Repayment Interest Total financing 0 Ending cash balance S (98,800) S 493,000 39,000 357,000 243,000 1,050,000 (1,050,000) 0 0 0 39,000 $ 243,000 $ (1,050,000) Required 2B Required 3