Garden Sales, Incorporated, usually has to borrow money during the second quarter to support peak sales of lawn care equipment during May. It gathered the following information to prepare 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 $$14\mathrm{.}000$ of depreciation each month.

b$.$ Sales are $20\%$ for cash and $80\%$ on account.

April $ $520,000$

May

June

$$720,000$

$$420,000$

July

$$320,000$

$364,000$

$504,000$

$294,000$

$224,000$

$156,000$

$216,000$

$126,000$

$96,000$

$72,000$

$92,000$

$53,000$

$32,000$

$41,000$

$54,400$

$33,200$

$30,000$

$113,000$

$146,400$

$86,200$

$62,000$

$ $43,000$

$$69,600$

$$39,800$

$$34,000$

c$.$ Sales on account are collected over a three$-$month period with $10\%$ collected in the month of sale, $80\%$ collected in the first month following the month of sale, and the remaining $10\%$ collected in the second morth following the month of sale. February's sales totaled $$150,000,$ and March's sales totaled $$300,000.$

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 $50\%$ are paid in the following month. Accounts payable at March $31$ for inventory purchases during March total $$120,400.$

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 $$72\mathrm{.}800.$

f$.$ Dividends of $$22\mathrm{.}000$ will be declared and paid in April.

g$.$ Land costing $$30\mathrm{.}000$ will be purchased for cash in May. h$.$

The cash balance at March $31$ is $$44,000$: the company must maintain a cash balance of at least $$40\mathrm{.}000$ at the end of each month.

$1.$ The company has an agreement with a local bank that allows the company to borrow in increments of $$1,000$ at the beginning of leach month, up to a total loan balance of $$200\mathrm{.}000.$ The Interest rate on these loans is $1\%$ per month, and for simplicity we will Vassume 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 bus tenin total

$2.$ Prepare the following for merchandise inventory

$6.$ Amerchandise purchases budget for April, May, and Juna

A sched

e of expected cash disbursements for merchandise purchases for Apr. Me May and Jone, and'o the quarter in tow