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-October are as follows:

July August September October Sales . . . .. $40,000 $70,000 $50,000 $45,000 Cost of goods sold . 24,000 42,000 30,000 27,000 Gross margin . . . ... 16,000 28,000 20,000 18.000 Selling and administrative expenses: Selling expense . . 7,200 11,700 8,500 7,300 Administrative expense* . 5,600 7,200 6,100 5.900 Total selling and administrative expenses. . . 12,800 18,900 14,600 13,200 Net operating income . . . . $ 3,200 9, 100 $ 5,400 $ 4.800 "Includes $2,000 depreciation each month