HELP! ONLY SOME NUMBERS MISSING! TY :) (QUESTIONS #1 AND #2 ARE DONE, ONLY NEED #3):

Garden Sales, Inc., 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:

a.	Budgeted monthly absorption costing income statements for AprilJuly are:

	April		May		June		July
Sales	$	500,000	$	700,000	$	400,000	$	300,000
Cost of goods sold		350,000		490,000		280,000		210,000
Gross margin		150,000		210,000		120,000		90,000
Selling and administrative expenses:
Selling expense		70,000		90,000		51,000		30,000
Administrative expense*		40,000		52,800		32,000		28,000
Total selling and administrative expenses		110,000		142,800		83,000		58,000
Net operating income	$	40,000	$	67,200	$	37,000	$	32,000

*Includes $12,000 of depreciation each month.

b.

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

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 month following the month of sale. Februarys sales totaled $140,000, and Marchs sales totaled $200,000.

d.

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 $91,000.

e.

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 $70,000.

f.

Dividends of $20,000 will be declared and paid in April.

g.

Land costing $28,000 will be purchased for cash in May.

h.

The cash balance at March 31 is $42,000; the company must maintain a cash balance of atleast $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.

Schedule of Expected Cash Collections
	April	May	June	Quarter
Cash sales	$100,000	$140,000	$80,000	$320,000
Sales on account:
February	11,200			11,200
March	128,000	16,000		144,000
April	40,000	320,000	40,000	400,000
May		56,000	448,000	504,000
June			32,000	32,000
Total cash collections	$279,200	$532,000	$600,000	$1,411,200

2.	Prepare the following for merchandise inventory:

a.

A merchandise purchases budget for April, May, and June.

Merchandise Purchases Budget
	April	May	June
Budgeted cost of goods sold	$350,000	$490,000	$280,000
Add: Desired ending merchandise inventory	98,000	56,000	42,000
Total needs	448,000	546,000	322,000
Less: Beginning merchandise inventory	70,000	98,000	56,000
Required inventory purchases	$378,000	$448,000	$266,000

b.

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
Beginning accounts payable	$91,000			$91,000
April purchases	189,000	189,000		378,000
May purchases		224,000	224,000	448,000
June purchases			133,000	133,000
Total cash disbursements	$280,000	$413,000	$357,000	$1,050,000

3.

Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Garden Sales, Inc.
Cash Budget
For the Quarter Ended June 30
	April	May	June	Quarter
Beginning cash balance	$42,000			$42,000
Add collections from customers	279,200	532,000	600,000	1,411,200
Total cash available	321,200	532,000	600,000	1,453,200
Less cash disbursements:
Purchases for inventory	280,000	413,000	357,000	1,050,000
Selling expenses	70,000	90,000	51,000	211,000
Administrative expenses	28,000	40,800	20,000	88,800
Land purchases	0	28,000	0	28,000
Dividends paid	20,000	0	0	20,000
Total cash disbursements	398,000	571,800	428,000	1,397,800
Excess (deficiency) of cash available over disbursements	(76,800)	(39,800)	172,000	55,400
Financing:
Borrowings			0
Repayment	0	0
Interest	0	0
Total financing	0	0	0	0
Ending cash balance	$(76,800)	$(39,800)	$172,000	$55,400

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