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 Hay June July Sales Cost of goods sold Gross margin Selling and administrative expenses: 670,000 $ 840,000 550,000 450,000 469,000 588,000 385,000 315,000 135,000 201,000 252,000 165,000 Selling expense Administrative expense 85,000 104,000 47,500 64,000 168,000 66,000 40,400 106,400 45,000 43,000 88,000 132,500 Total selling and administrative expenses Net operating income 68,500 84,000 58,600 47,000 "Includes $27000 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: 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 totaled $255,000, and March's sales totaled $270,000 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 $122,500 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 $93,800