Garden Sales, Incorporated, 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: Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income *Includes $30,000 of depreciation each month. April $ 700,000 490,000 May June $ 870,000 609,000 $ 580,000 406,000 July $ 480,000 336,000 210,000 261,000 174,000 144,000 88,000 107,000 69,000 48,000 49,000 137,000 66,400 42,800 46,000 173,400 111,800 94,000 $ 73,000 $ 87,600 $ 62,200 $ 50,000 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 $270,000, and March's sales totaled $285,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of