Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. 5 The company is planning its cash needs for the quarter. In the past, Janus Products has had to borrow money 6 during the quarter to support peak sales of back-to-school materials. 7 Budgeted monthly absorption costing income statements for July to October are as follows: Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense" Total selling and administrative expenses Net operating income July $57,eee 30,800 26,280 August $87,000 48,800 38,200 September $67,899 36,800 30,200 October $62,000 33,800 28,200 12,300 6,500 18,800 $ 7,400 15,100 8.900 24,000 $14,200 10,200 7,800 18,000 $12,200 9.ee 7,600 16,600 $11,600 "Includes $2,850 depreciation each month. b. Sales are 20% for cash and 80% on credit 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 $47.000, and June sales totalled $53,000 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 $20.200. 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 $26,500 1. Land costing $5.350 will be purchased in July 9. Dividends of $1,850 will be declared and paid in September h Tharash! "MALL The cash balance on June 30 is $9,700, the company must maintain a cash balance of at least this amount at the end of each month The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. 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 loan plus accumulated interest at the end of the quarter Required: 1. Prepare a schedule of expected cash collections for July, August and September and for the quarter in total Quarter JANUS PRODUCTS, INC. Schedule of Expected Cash Collections July August September Cash sales Credit sales May June July August September Total cash collections 2. Prepare the following for merchandise inventory: a. A merchandise purchases budget for July, August, and September. JANUS PRODUCTS, INC. Merchandise Purchases Budget July August September Total needs