Need help with part D only. I dont understand the borrowing part.

a. Budgeted monthly absorption costing income statements for April-July are: April $ 528,000 364,000 156. Bee May $ 229, eee 504,000 216,000 June $ 420,000 294,000 126,00 July $ 320,000 224, 96,00 Sales Cost of goods sold Gross sargin Selling and administrative expenses: Selling expense Administrative expense" Total selling and administrative expenses Net operating income Includes $14.000 of depreciation each month 72,000 41,000 113,000 $ 43,000 92,000 54,400 146 480 $ 69,6 53,000 33,200 86, 200 $ 39,80 32,800 3e, see 62.ee $ 34,00 b. Sales are 20% for cash and 80% on account c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 80% collected in the first month following the month of sale, and the remaining 10% collected in the second month following the month of sale. February's soles totaled $150,000, and March's sales totaled $300,000 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 at March 31 for inventory purchases during March total $120.400 e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise Inventory at March 31 is $72.800 t. Dividends of $22.000 will be declared and paid in April. g. Land costing $30,000 will be purchased for cash in May n. The cash balance at March 31 is $44.000, the company must maintain a cash balance of at least $40.000 at the end of each month. 1. The company has an agreement with a local bank that allows the company to borrow in increments of $1.000 at the beginning of cach month, up to a total loan balance of $200,000. 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 Bril, May, and June, and for the quarter in total. Schedule of Expected Cash Collections April May June Quarter $ 104.000 144.000 $ 84,000 $ 332,000 Cash sales Sales on account Forum March Apri May 12.000 192.000 41.600 24.000 332.800 57,600 12.000 216.000 416,000 518.400 33,600 $. 1.528.000 41,600 460.800 33.600 $ 620.000 You cash colections $ 349,000 3 558 400 Requr 1 June $ Merchandise Purchases Budget April May Budgeted cost of goods sold 364.000 504,000 Add Desired ending merchandise inventory 100.800 58,800 Total needs 464,800 562,800 Less: Beginning merchandise inventory 72.800 100,800 Required inventory purchases 392.000 462,000 >> 294,000 44.800 338.800 58,800 280,000 Required 1 Required 2A Required 20 Required 3 Prepare the following for merchandise inventory, a schedule of expected cash disbursements for merchandise purchas April, May, and June, and for the quarter in total. Schedule of Expected Cash Disbursements for Merchandise Purchases April May June Quarter Beginning accounts payable 120400 120,400 April purchases 196.000 190.000 392,000 May purchases 231.000 231,000 462,000 June purchases 140,000 140,000 Total cash disbursements 316.400 $427,000 $ 371,000 $ 1,114.400 $ $ 8 June Quarter May 558.400 558.400 620,000 620,000 1,528,000 1,528,000 Garden Sales, Incorporated Cash Budget For the Quarter Ended June 30 April $ 44,000 Beginning cash balance 349,600 Add collections from customers Total cash available 393.600 Less cash disbursements: Purchases for inventory 316,400 Selling expenses 72,000 Administrative expenses 27,000 Land purchases Dividends paid 22.000 Total cash disbursements 437.400 Exo (deficiency of cash available over disbursements (43,800) Financing Borrowing Repynt Interest Total financing 0 Ending cash balance $ (43.500) 19,200 40.400 30,000 0 70.400 488,000 19,200 600,800 1,528,000 0 0 0 488,000 $ 600,800 $ 1,528,000