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Green Lawn Company sells garden supplies. Management is planning its cash needs for the second quarter. The following information has been assembled to assist in

Green Lawn Company sells garden supplies. Management is planning its cash needs for the second quarter. The following information has been assembled to assist in preparing a cash budget for the quarter:Budgeted monthly income statements for July to October are as follows: July August September OctoberSales$540,000 $780,000 $460,000 $380,000 Cost of goods sold 372,000540,000322,000266,000 Gross margin 168,000240,000138,000114,000 Less: Operating expenses: Selling expense 75,200108,00055,60046,800 Administrative expense*42,00047,40038,80036,400 Total operating expenses 117,200155,40094,40083,200 Net income$50,800 $84,600 $43,600 $30,800*Includes $17,000 in depreciation each month.Sales are 20% for cash and 80% on account.Sales on account are collected over a three-month period in the following ratio: 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. Mays sales totalled $220,000, and Junes sales totalled $300,000.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% are paid in the following month. Accounts payable at June 31 for inventory purchases during June total $108,000.At the end of each month, inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $74,400.Dividends of $43,400 will be declared and paid in July.Equipment costing $15,800 will be purchased for cash in August.The cash balance at June 30 is $47,600; the company must maintain a cash balance of at least $35,000 at all times.The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples of $1,000. Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is 12%. Compute interest on whole months (1/12,2/12, and so forth).Required:1. Prepare a schedule of expected cash collections from sales for each of the months July, August, and September, and for the quarter in total. Green Lawn CompanySchedule of Expected Cash CollectionsJulyAugustSeptemberQuarterCash sales$108,000$156,000$92,000Sales on account:MayJuneJulyAugustSeptemberTotal cash collections$108,000$156,000$92,000$02. Prepare the following for merchandise inventory:a. An inventory purchases budget for each of the months July, August, and September. Green Lawn CompanyInventory Purchases BudgetJulyAugustSeptemberBudgeted cost of goods sold$540,000Add: Desired ending inventoryTotal needsDeduct: Beginning inventory74,400Required inventory purchases b. A schedule of expected cash disbursements for inventory for each of the months July, August, and September and for the quarter in total. Green Lawn CompanySchedule of Expected Cash Disbursements for InventoryJulyAugustSeptemberQuarterAccounts payable, June 30July purchasesAugust purchasesSeptember purchasesTotal cash disbursements$0$0$0$03. Prepare a cash budget for the third quarter, by month as well as in total for the quarter. Show borrowings from the companys bank and repayments to the bank, as needed, to maintain the minimum cash balance. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) Green Lawn CompanyCash BudgetFor the Quarter Ended September 30JulyAugustSeptemberQuarterCash balance, beginningAdd: Collections from salesTotal cash available0000Deduct: Disbursements:Administrative expensesDividends paidEquipment purchasesPurchases for inventorySelling expensesTotal disbursements0000Excess (deficiency) of cashFinancing:BorrowingsInterestRepaymentsTotal financing0000Cash balance, ending

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