'Includes $$22,000$ of depreclation each month.

bales 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; $70\%$ 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 $$205,000,$ and March's sales totaled $$245,000.$

Inventory purchases are paid for within $15$ days. Therefore, $50\%$ of a month's inventory purchases are paid for in the

month of purchase. The remaining $50\%$ is pald In the following month. Accounts payable at March $31$ for inventory

purchases during March total $$104,300.$

e$.$ Each month's ending imventory must equal $20\%$ of the cost of the merchandise to be sold in the following month. The

merchandise inventory at March $31$ is $$71,400.$

t$.$ Dlvidends of $$29,000$ will be declared and paid in April.

Land costing $$37,000$ will be purchased for cash in May.

The cash balance at March $31$ is $$51,000$; the company must malintaln a cash balance of at least $$40,000$ at the end

of each month.

L$.$ 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

ioan plus accumulated Interest at the end of the quarter

The company's president is interested in knowing how reducing inventory levels and collecting accounts recelvable

sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:

a$.$ Sales continue to be $20\%$ for cash and $80\%$ on credit. However, credit sales from April, May, and June are collected

over a three$-$month period with $25\%$ collected in the month of sale, $65\%$ collected in the month following sale, and

$10\%$ in the second month following sale. Credit sales from February and March are collected during the second

quarter using the collection percentages specified in the main section.

The company maintains Its ending Inventory levels for April, May, and June at $15\%$ of the cost of merchandise to be

sold in the following month. The merchandise inventory at March $31$ remains $$71,400$ and accounts payable for

inventory purchases at March $31$ remains $$104,300.$

Required:

Using the president's new assumptions In $($a$)$ above, prepare a schedule of expected cash collections for April, May,

and June and for the quarter in total.

Using the president's new assumptions in $($b$)$ above, prepare the following for merchandise inventory:

a$.$ A merchandise purchases budget for Aprli, May, and June.

b$.$ A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter

in total.

Using the president's new assumptions, prepare a cash budget for April, May, and June, and

for the quarter in total.

Complete this question by entering your answers in the tabs below.

Using the president's new assumptions in $($b$)$ above, prepare the following for merchandise

inventory, a schedule of expected cash disbursements for merchandise purchases for April,

May, and June and for the quarter in total.

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