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 $52,000 82,000 $ 62,000 $57,000 31,000 49,000 37,000 34,000 Sales Cost of goods sold Gross margin Selling and administrative expenses: 21,000 33,000 25,000 23,000 Selling expense Administrative expense 6,100 10,000 8,100 7,600 5,100 7,000 6,200 5,600 Total selling and administrative expenses ,200 17,000 14,300 13,200 9,800 16,000 10,700 9,800 Net operating income Includes $1,000 depreciation each month. b. Sales are 20% for cash and 80% on credit. C. Credit sales are collected over a three-month period with 15% collected in the month of sale, 45% in the month following sale, and 40% in the second month following sale. May sales totaled $36,000, and June sales totaled $42,000. 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% s paid in the following month. Accounts payable for inventory purchases at June 30 total $11,600 e. The company maintains its ending inventory levels at 90% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $27,900. f. Land costing $4,600 will be purchased in July g. Dividends of $1,100 will be declared and paid in September. h. The cash balance on June 30 is $5,000; 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 Selling expense Administrative expense* 5,100 7,000 6200 5,600 Total selling and administrative expenses 11,200 17,000 4,300 13,200 $ 9,800 $ 16,000 $ 10,700 $ 9,800 Net operating income Includes $1,000 depreciation each month. b. Sales are 20% for cash and 80% on credit. c. Credit sales are collected over a three-month period with 15% collected in the month of sale, 45% in the month following sale, and 40% in the second month following sale. May sales totaled $36,000, and June sales totaled $42,000. 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% is paid in the following month. Accounts payable for inventory purchases at June 30 total $11,600 e. The company maintains its ending inventory levels at 90% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $27,900 f. Land costing $4,600 will be purchased in July g Dividends of $1,100 will be declared and paid in September h. The cash balance on June 30 is $5,000; 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 9 beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter Required 1. Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total.( Leave no cells blank - be certain to enter "o" wherever required. Do not round intermediate calculations. Omit the "$" sign in your response.) Schedule of Expected Cash Collections July Quarter September August Cash sales Sales on account: May June July st September Total cash collections 2. Prepare the following for merchandise inventory a. A merchandise purchases budget for July, August, and September. (Input all amounts as positive values. Do not round intermediate calculations. Omit the "$" sign in your response.) Merchandise Purchases Budget September August July Budgeted cost of goods sold (Click to select)(Click to select) Total needs (Click to select)(Click to select) Required inventory purchases b. A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total. (Leave no cells blank- be certain to enter "o" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash Disbursements Quarter September August July Accounts payable, June 30 July purchases August purchases September purchases Total cash disbursements 3. Prepare a cash budget for July, August, and September and for the quarter in total. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed. Selling and Administrative expenses are paid in the month in which the expenses are incurred. Leave no cells blank - be certain to enter "O" wherever required. Omit the "$" sign in your response.) Janus Products, Inc Cash Budget For the Quarter Ended September 30 August September Quarter July Cash balance, beginning Add collections from sales Total cash available Less disbursements For inventory purchases For selling expenses For administrative expenses For land For dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayment Interest Total financing Cash balance, ending