July August September October Sales $43, 000 $73, 000 $53, 000 $48, 000 Cost of goods sold 25, 200 43, 200 31, 200 28, 200 Gross margin 17, 800 29 , 800 21, 800 19, 800 Selling and administrative expenses: Selling expense 8, 100 12, 300 8 , 800 7, 600 Administrative expense* 5 , 800 7,500 6, 400 6, 200 Total selling and administrative expenses 13, 900 19, 800 15, 200 13, 800 Net operating income $ 3,900 $10, 000 $ 6,600 $ 6,000 "Includes $2,150 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 sales and 20% in the second month following sale. May sales totalled $33,000, and June sales totalled $39,000. 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 $13,200. 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 $19,500. f. Land costing $4,650 will be purchased in July. g. Dividends of $1,150 will be declared and paid in September. h. The cash balance on June 30 is $8,300; 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. JANUS PRODUCTS, INC. Schedule of Expected Cash Collections July August September Quarter Cash sales Credit sales: May June July