Garden Sales, Incorporated, sells garden supplies. Management is planing its casf needs for the second quarter. The company usually has to borrow money during this quater to support peak sales of lavn care eaumpent, which occur dung May. The followi information has been assembled to assist in preparing a cash budget for the quatter

a$.$ Budgeted monthly absorption costing income statements for April$-$July are:

Sales

Cost of goods sold

Gross margin

Selling and administrative expenses:

Selling expense

Administrative expense:

Total selling and adninistrative expenses

Net operating incone

sincludes $$22000$ of depreciation each month

b$.$ Sales are $20\%$ for cash and $80\%$ on account totaled $$205,000,$ and March's sales totaled $$24500$ total $$104,300$ inventory at March $31$ is $$71\mathrm{.}400$

f$.$ Dividends of $$29,000$ will be declared and paid in Aprl:

g$.$ Land costing $$37,000$ will be purchased for cash in May

h$.$ The cash balance at March $31$ is $$51,000$; the company must maintain a cash balance of at least $$40,000$ at the end of each month.

The company has an agreement with a local bank that allows the gompany to bortew in morements of $$1,000$ at the beginning of each month, up to a total loan balance of $$200\mathrm{.}000.$ The interest rate on these $10$ ans 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

The company's president is interested in knowing how reduding inventary levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: month period with $25\%$ collected in the month of sale. $6.$ march are collect during the second quarter using the collection percentages following sale. Credit sales from Februat Rrav

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