Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter a. Budgeted monthly absorption costing income statements for July to October are as follows: July Sales $70,000 Cost of goods sold August $100,000 September $80,000 October $75,000 42,000 60,000 Gross margin 48,000 45,000 Administrative expense Selling and administrative expenses: Selling expense 28,000 40,000 32,000 30,000 12,600 17,000 13,600 12,000 Total selling and administrative expenses Net operating income 9,800 12,600 9,600 10,500 22,400 29,600 23,200 22,500 "Includes $2,000 depreciation each month. b. Sales are 25% for cash and 75% on credit $5,600 $ 10,400 $8,800 $ 7,500 c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% in the month following sale, and 20% in the second month following sale. May sales totalled $48,000, and June sales totalled $54,000. d. 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% are paid in the following month. Accounts payable for inventory purchases at June 30 total $17,550