HOME GNOMES, Inc. sells decorative supplies for homes and gardens. Cash planning for the April and May is under way. The following information has been assembled to assist in preparing a cash budget for April and May:

Budgeted monthly income statements for April to June are as follows:

April May June Sales $500,000 $760,000 $400,000 Cost of goods sold 336,000 500,000 280,000 Gross margin 164,000 260,000 120,000 Less: Operating expenses: Selling expense 63,000 95,000 49,000 Administrative expense 36,000 42,000 32,000 Total operating expenses 99,000 137,000 81,000 Net income $ 65,000$ 123,000 $ 39,000