Herbal Care Corp., a distributor of herb-based sunscreens, is ready to begin its third quarter, in which peak sales occur. The company has requested a $40,000, 90-day loan from its bank to help meet cash requirements during the quarter. Since Herbal Care has experienced difficulty in paying off its loans in the past, the loan officer at the bank has asked the company to prepare a cash budget for the quarter. In response to this request, the following data have been assembled: On July 1, the beginning of the third quarter, the company will have a cash balance of $53,000 b. Actual sales for the last two months and budgeted sales for the third quarter follow (all sales are on account) 400,000 May (actual) 440,000 June (actual) 560,000 July (budgeted) 770,000 August (budgeted) 395,000 September (budgeted) Past experience shows that 25% of a month's sales are collected in the month of sale, 70% in the month following sale, and 3% in the second month following sale. The remainder is uncollectible. c. Budgeted merchandise purchases and budgeted expenses for the third quarter are given below: July August September Merchandise $336,000 $462,000 $237,000 purchases Salaries and 43,000 3,000 64,000 Wages Advertising $225,000 $144,500 $104,000 Rent payments 9,600 9,600 9,600 Depreciation 10,750 10,750 10,750 Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases on June 30, which will be paid during July, total $264,000. d.Equipment costing $10,000 will be purchased for cash during July e.In preparing the cash budget, assume that the $40,000 loan will be made in July and repaid in September. Interest on the loan will total $1,200