Garden Sales, Inc. sells garden supplies, Management is planning its cash needs for the second quarter The following information has been assembled to assist in preparing a cash budget for the quarter a Budgeted monthly income staternents for April to July are as follows. April $650,eee 438,000 212,000 May 5890,000 606,000 284.eee June $570.000 399,000 171.000 July $490,000 343,000 147,eee Sales cost of goods sold GROSS margin Less: Operating expenses Selling expense Administrative expense Total Operating expenses Net Income 97,200 53,000 150, 200 $ 61,800 130,000 05. 200 195,700 $ 88,300 66,600 49,800 116.400 $ 54,600 57.800 47.400 205.zee 5.41.00 Tincludes $10,000 in depreciation each month. b. Sales are 20% for cash and 80% on account c Sales on account are collected over a three-month period in the following ratio: 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 totalled $330.000 and March's sales totalled $410,000 d. Inventory purchases are paid for within 15 days. Therefore 50% of a month's inventory purchases are paid for in the month of be Themen in the famonth notina 21 La Mah February's sales totalled $330,000, and March's sales totalled $410,000 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% are paid in the following month Accounts payable at March 31 for inventory purchases during March total $121,200 e. At the end of each month, inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month The merchandise inventory at March 31 is $87,600 Dividends of $67100 will be declared and paid in April g. Equipment costing $21300 will be purchased for cash in May n. The cash balance at March 31 is $58,600, the company must maintain a cash balance of at least $46,000 at all times The company can borrow from its bank, as needed, to bolster the cash account Borrowings and repayments must be in multiples of $500. Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12% Compute interest on whole months (1/12, 2/12 and so forth). Required: a 1. Prepare a schedule of expected cash collections from sales for each of the months April May, and June, and for the quarter in total, GARDEN SALES, INC. Schedule of Expected Cash Collections April May June Quarter Cash sales Sales on account February March ENG 2. Prepare the following for merchandise inventory: a. An inventory purchases budget for each of the months April May, and June May June GARDEN SALES, INC. Inventory Purchases Budget April Budgeted cost of goods sold Add: Desired ending inventory Total needs Deduct Beginning inventory Required inventory purchases b. A schedule of expected cash disbursements for inventory for each of the months April May, and June, and for the quarter in total Quarter GARDEN SALES, INC Schedule of Expected Cash Disbursements for inventory April May June Accounts payable, March 31 April purchases May purchases June purchases Total cash disbursements $ OS 05 $ 0 3 Pranare Arach hinar for the third unter hy month a wellne in total for the ruuter Showbrowinns from the man's hank April MY une Duarte 0 0 0 0 Cash balance beginning Add Collections from sales Total cash avable Deduct Dhbursements Purchases for inventory Seling expenses Administrative expenses Equipment purchases Dividends paid 0 0 0 Total disbursements Excess (deficiency) of cash Financing Borrowings Repayments interest 0 0 0 0 Total financing Cash balance, ending