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		August		September		October
Sales	$	48,000	$	78,000	$	58,000	$	53,000
Cost of goods sold		27,200		45,200		33,200		30,200
Gross margin		20,800		32,800		24,800		22,800
Selling and administrative expenses:
Selling expense		9,600		13,300		9,300		8,100
Administrative expense*		6,050		8,000		6,900		6,700
Total selling and administrative expenses		15,650		21,300		16,200		14,800
Net operating income	$	5,150	$	11,500	$	8,600	$	8,000

*Includes $2,400 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 $38,000, and June sales totalled $44,000.
d.	Inventory purchases are paid for within 15 days. Therefore, 50% of a months 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 $15,700.
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 $22,000.
f.	Land costing $4,900 will be purchased in July.
g.	Dividends of $1,400 will be declared and paid in September.
h.	The cash balance on June 30 is $8,800; the company must maintain a cash balance of at least this amount at the end of each month.
i.	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.

2.	Prepare the following for merchandise inventory:

a.	A merchandise purchases budget for July, August, and September.

b.	A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total.

JANUS PRODUCTS, INC. Schedule of Expected Cash Collections July August September Quarter Cash sales $ 9,600 $ 15,600 $ 11,600 $ 36,800 Credit sales: May 6,080 6,080 June 24,640 7,040 31,680 July 3,840 26,880 7,680 38,400 August 6,240 43,680 49,920 September 4,640 4,640 Total cash collections $ 44,160 $ 55,760 $ 67,600 $ 167,520 JANUS PRODUCTS, INC. Merchandise Purchases Budget July August September Budgeted cost of goods sold $ 27,200 $ 45,200 $ 33,200 Add: Desired ending inventory 33,900 24.900 22,650 Total needs 61,100 70,100 55,850 Deduct: Beginning inventory 22,000 Required inventory purchases Quarter JANUS PRODUCTS, INC. Schedule of Expected Cash Disbursements July August September Accounts payable, June 30 July purchases August purchases September purchases Total cash disbursements 0 0 $ 0 0 3. Prepare a cash budget for July, August, and September and for the quarter in total. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.) JANUS PRODUCTS, INC. Cash Budget For the Quarter Ended September 30 July August September Quarter 0 0 0 0 Add: Collections from sales Total cash available Deduct: Disbursements: Inventory purchases Selling expenses Administrative expenses Land Dividends 0 0 0 available over disbursements Total disbursements Excess (deficiency) of Financing Borrowings Repayments Interest 0 0 0 0 Total financing Cash balance, ending