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 $26,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. April $ 660,000 462,000 May June July $ 830,000 581,000 $ 540,000 378,000 $ 440,000 308,000 198,000 249,000 162,000 132,000 84,000 103,000 65,000 44,000 47,000 63,200 39,800 42,000 131,000 166,200 104,800 86,000 $ 67,000 $ 82,800 $ 57,200 $ 46,000 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 $250,000, and March's sales totaled $265,000. 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 $120,400. e. Each month's ending inventorv must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise