In part 3 of the question, it asks for a cash budget for the third quarter, but it should be for the second quarter (April, May, and June).

Garden Sales, Inc. sells garden supp The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly income statements for April to July are as follows: May June $720,000 504,000 216,000 $400,000 280,000 120,000 July $320.000 224,000 96,000 April Sales $480,000 Cost of goods sold 336,000 Gross margin 144,000 Less: Operating expenses: Selling expense 63,200 Administrative expense* 36,000 Total operating expenses 99,200 Net income $ 44,800 *Includes $20,000 in depreciation each month. 96,000 41,600 137,600 $ 78,400 49,600 32,800 82,400 $ 37,600 40,800 30,400 71,200 $ 24,800 b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period in the following ratio: 10% collected in the month of sale, 70% collected in the first month following the month of sale, and the remaining 20% ork lected in the second month following the month of sale. February's sales totalled $160,000, and Marcis sales totalled $240,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases & paid for in the month of purchase. The remaining 50% are paid in the following month. Accounts paga able at March 31 for inventory purchases during March total $100,800. e. At the end of each month, inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $67,200. are at all times. 1. Dividends of $39,200 will be declared and paid in April. Equipment costing $12,800 will be purchased for cash in May. The cash balance at March 31 is $41,600; the company must maintain a cash balance of at least $32,000 ments must be in multiples of $1,000. Interest is due only when principal is repaid and is calculated on The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repay- the beginning of a month, and all repayments are made at the end of a month. The annual interest rate is the amount of repayment for the duration of the time money was borrowed. All borrowings take place at 12%. Compute interest on whole months (1/12, 2/12, and so forth). OSOS THE Prepare a schedule of expected cash collections from sales for each of the months April, May, and June, and for the quarter in total. 2. Prepare the following for merchandise inventory: a. An inventory purchases budget for each of the months April, May, and June. b. A schedule of expected cash disbursements for inventory for each of the months April, May, and June, and for the quarter in total. 3. Prepare a cash budget for the third quarter, by month as well as in total for the quarter. Show borrow- ings from the company's bank and repayments to the bank, as needed, to maintain the minimum cash balance. 4. What is the advantage of preparing the cash budget by month as opposed to on a full-quarter basis? Required