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: Sales Cost of goods sold i Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating income "Includes $2,000 depreciation each month. b. Sales are 20% for cash and 80% on credit. July $140,000 August $170,000 September $150,000 October $145,000 14,000 102,000 90,000 87,000 56,000 68,000 60,000 58,000 25,200 28,900 25,500 23,200 19,600 25,200 18,000 20,300 44,800 54,100 43,500 43,500 $ 11,200 $ 13,900 $ 16,500 $ 14,500 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 $90,000, and June sales totalled $96,000. 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 $31,200. e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $48,000. f. Land costing $6.500 will be purchased in July. g. Dividends of $6,000 will be declared and paid in September h. The cash balance on June 30 is $18.000; the company must maintain a cash balance of at least this amount at the end of each month.