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 budgetfor the quarter: a. Budgeted monthly absorption costing income statements for AprilJuly are: April May June July Sales $ 590,888 $ 793,993 1. 493,993 $ 398,880 Cost of goods sold 413,888 553,888 343,888 276,880 Gross margin 177,688 232,886 142,688 112,866 Selling and administrative expenses: Selling expense 80,888 99,888 60,888 39,880 Administrative expense\" 44,588 68,886 3?,488 32,880 Total selling and administrative expenses 124,588 159,880 97,488 76,860 Net operating income $ 52.1593 5 731390 $ 491599 $ 411399 *lncludes $22,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a threemonth period with 10% collected in the month of sale; 80% collected in the rst month following the month of sale; and the remaining 10% collected in the second month following the month of sale. February's sales totaled $205,000, and March's sales totaled $245,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% ofa 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 $109,900. 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 $82,600. f. Dividends of$29,000 will be declared and paid in April. 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. i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans 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. Required: 1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter. Required 1 Required 2A. Required 23 Required 3 Cash sales Sales on account: Total cash collections Required 1 Required 2A Required 2B Required 3 Prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June. Merchandise Purchases Budget April May June Total needs 0 0 0 Required inventory purchases 69 0 $ 0 0Required 1 Required 2A Required 2B Required 3 Prepare the following for merchandise inventory, a schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. Schedule of Expected Cash Disbursements for Merchandise Purchases April May June Quarter $ 0 April purchases 0 May purchases 0 June purchases 0 Total cash disbursements $ 0 $ 0 $ 0 0Garden Sales, Incorporated Cash Budget For the Quarter Ended June 30 April May June Quarter Beginning cash balance Add collections from customers Total cash available 0 0 0 Less cash disbursements: Purchases for inventory Selling expenses Administrative expenses Land purchases Dividends paid Total cash disbursements 0 0 0 0 Excess (deficiency) of cash available over disbursements 0 0 0 Financing: Borrowings Repayment Interest Total financing 0 0 0 0 Ending cash balance $ 0 $ 0 0