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:

Budgeted monthly absorption costing income statements for AprilJuly are:

	April	May	June	July
Sales	$ 650,000	$ 820,000	$ 530,000	$ 430,000
Cost of goods sold	455,000	574,000	371,000	301,000
Gross margin	195,000	246,000	159,000	129,000
Selling and administrative expenses:
Selling expense	83,000	102,000	64,000	43,000
Administrative expense*	46,500	62,400	39,200	41,000
Total selling and administrative expenses	129,500	164,400	103,200	84,000
Net operating income	$ 65,500	$ 81,600	$ 55,800	$ 45,000

*Includes $25,000 of depreciation each month.

Sales are 20% for cash and 80% on account.

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. Februarys sales totaled $245,000, and Marchs sales totaled $260,000.

Inventory purchases are paid for within 15 days. Therefore, 50% of a months 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 $118,300.

Each months 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 $91,000.

Dividends of $32,000 will be declared and paid in April.

Land costing $40,000 will be purchased for cash in May.

The cash balance at March 31 is $54,000; 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 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:

3. Prepare a cash budget for April, May, and June as well as in total for the quarter.

Please help answer #3:

Garden Sales, Incorporated
Cash Budget
For the Quarter Ended June 30
	April	May	June	Quarter
Beginning cash balance	$54,000selected answer correct	$40,600selected answer correct	$40,160selected answer incorrect	$54,000selected answer correct
Add collections from customers	366,800selected answer correct	635,200selected answer correct	711,600selected answer correct	1,713,600selected answer correct
Total cash available	420,800	675,800	751,760	1,767,600
Less cash disbursements:
Purchases for inventory	357,700selected answer correct	506,100selected answer correct	445,200selected answer correct	1,309,000selected answer correct
Selling expenses	83,000selected answer correct	102,000selected answer correct	64,000selected answer correct	249,000selected answer correct
Administrative expenses	21,500selected answer correct	37,400selected answer correct	14,200selected answer correct	73,100selected answer correct
Land purchases	0selected answer correct	40,000selected answer correct	0selected answer correct	40,000selected answer correct
Dividends paid	32,000selected answer correct	0selected answer correct	0selected answer correct	32,000selected answer correct
Total cash disbursements	494,200	685,500	523,400	1,703,100
Excess (deficiency) of cash available over disbursements	(73,400)	(9,700)	228,360	64,500
Financing:
Borrowings	114,000selected answer correct	51,000selected answer incorrect	0selected answer correct	165,000selected answer incorrect
Repayment	0selected answer correct	0selected answer correct	(165,000)selected answer incorrect	(165,000)selected answer incorrect
Interest	not attempted	(1,140)selected answer incorrect	(1,650)selected answer incorrect	(2,790)selected answer incorrect
Total financing	114,000	49,860	(166,650)	(2,790)
Ending cash balance	$40,600	$40,160	$61,710	$61,710

Please answer using EXCEL and the work plan.

THANK YOU!