Hello

I need help with required question #2....in the "merchandise purchases budget box" below, I have highlighted in yellow the answers I need help in.

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash 8,800 Accounts receivable 25,20 Inventory 47,400 Building and equipment, net Accounts payable 114.000 28.42 Common stock 150,000 Retained earnings 16,975 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) 3,000 Apri 79,000 May 84,000 June 109,00 July 60,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. : Monthly expenses are as follows: commissions, 12% of sales; rent, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets) g. Equipment costing $2,800 will be purchased for cash in April. h. Management would like to maintain a minimum cash balance of at least $4,000 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 $20,000. 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: Using the preceding data: 1. Complete the schedule of expected cash collections. 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. 3. Complete the cash budget. 4. Prepare an absorption costing income statement for the quarter ended June 30. 5. Prepare a balance sheet as of June 30. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 59,250 $63,000 $ 81,750 $ 204,000 Add desired ending merchandise inventory 50,400 65,400 36,000 151,800 Total needs 109,650 128,400 17,750 355,800 Less beginning merchandise inventory 47,400 50,400 65,400 163,200 Required purchases $ 62,250 $78,000 $ 52,350 $ 192,600 Budgeted cost of goods sold for April = $79,000 sales x 75% = $59,250. Add desired ending inventory for April = $63,000 x 80% = $50,400. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases $ 28,425 $ 28,425 April purchases 31,125 31,125 62,250 May purchases 39,000 39,000 78,000 June purchases 26,175 26,175 Total disbursements $ 59,550 $70,125 $ 65,175 $ 194,850