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 Apri-July are May April S 550,000 750,000 450,000 S 350,000 July Sales Cost of goods sold Gross margin Selling and administrative expenses: 245,000 165,000 75,000 117,500 135,000 56,000 35.000 91,000 105,000 35,000 68,000 Selling expense 95,000 151,800 Total selling and administrative expenses Net operating income Includes $17,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected o er a three-month period with 10% collected in the month of sale; 80% collected in the st month ollowing the month of sale; and the emaining 10% collected in the second month following the month of sale. February's sales totaled $165,000, and March's sales totaled $225,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a months inventory purchases are paid or in the month o purchase. The remaining 50% s aid in the following month. Accounts payable at March 31 or inventory purchases during March total $101,500 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 $77,000 f. Dividends of $25,000 will be declared and paid in April. g. Land costing $33,000 will be purchased for cash in May. h. The cash balance at March 31 is $47,000; the company must maintain a cash balance of at least $40,000 at the end of each month. 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 S200 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. Schedule of Expected Cash Collections June Quarter Cash sales Sales on account Februany March Apri May June Total cash collections