John o company that and other school is planning needs the the has had to borrow money the to suport peak of back to school materials following information has been assembled to in preparing quarter absorption costing statements for July to Odober are as 1 and 1 includes $2.800 depreciation each month Sales are 20and credit c sales are collected over a three-month period , 10 collected in the month of sale, 70% in the month following sale, and 20in the second month following sale May sales totalled \$46,000 , and June sales totalled are paid for within 15 days Therefore, 50of month's Inventory purchases are paid for in the month of purchaseremaining in the following month Accounts payable for inventory purchases 30 total The company maintains its ending inventory levels at 75\% of the cost of the merchandise to be sold in the following monthThe merchandise inventory June 30 526,000 will be purchased in July Dividends of be declared and paid in September cash balance a

on June 30 \$9.600 the company muut maintain a cash balance of least 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 the beginning of each month u loan balance of $40,000. The interest rate on these loons per monthand for simplicity, we will assume that not compounded . The company would, as far as it is able repay the loan plus accumulated interest the end of the

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 356,000 38,400 25,600 August $86,000 48,400 37,600 September 566,000 36 400 29,600 October $61,00 33,400 27,600 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses Net operating Income 12,000 6,450 18.450 $ 7,150 14,900 8,800 23,700 $13,900 10,100 7,200 17 Hee 111, 8,900 7500 16,400 $11,200 includes $2.800 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 $46,000, and June sales totalled $52,000, 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 $19700 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 $26,000 * Land costing $5.300 will be purchased in July 9. Dividends of $1,800 will be declared and paid in September h. The cash balance on June 30 is $9.600, the company must maintain a cash balance of at least this amount at the end of each month 1. 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