How do you calculate borrowings? in the bottom of the cash budget? also what are the May and June beginning cash balance?
_ $ 711,600 1,713,600 711,600 1 ,767,600 445,200 64,000 Beginning cash balance 54,000 366,800 420,800 Add collections from customers Total cash available Less cash disbursements: Purchases for inventory 357,700 83,000 506,100 102,000 37,400 40,000 1 309,000 249,000 73,100 40,000 Selling expenses Administrative expenses Land purchases Dividends paid 32,000 494,200 (73,400) Total cash disbursements 685,500 (50,300) 523,400 188,200 1,703,100 Excess (deciency) of cash available over disbursements 64,500 Financing: Borrowings Repayment Interest Total nancing Ending cash balance $ 64,500 $ (73,400) $ (50,300) $ 188,200 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 $ 650,000 $ 820,000 $ 530,000 $ 430,000 Cost of goods sold 455,000 574,000 371,000 301,000 Gross margin 195,000 246,000 159,000 129,000 Selling and administrative expenses: Selling expense 83,000 102,000 64,000 43,000 Administrative expense* 46,500 62,400 39,200 41,000 Total selling and administrative expenses 129,500 164,400 103,200 84,000 Net operating income $ 65,500 $ 81,600 $ 55,800 $ 45,000 l *lncludes $25,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. Sales on account are collected over a threemonth period with 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. February's sales totaled $245,000, and March's sales totaled $260,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% ofa month's 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 $118,300. e. Each month's 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 $91,000. f. Dividends of $32,000 will be declared and paid in April. 9. Land costing $40,000 will be purchased for cash in May. .0 h. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $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. 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter in total. 3. Prepare a cash budget for April, May, and June as well as in total for the quarter
