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Problem 8-25 (Algo) Cash Budget with Supporting Schedules; Changing Assumptions [LO8-2, LO8-4, LO8-8] Garden Sales, incorporated, sells garden supplies Management is planning its cash needs for the second quartec. The company usually has to borrow money durng this quarter to support peak sales of lawn care equipment, which occur during May. The following intormation has been assembled to assist in preparing a cash budget for the quarter a. Budgeted monthly absorpton costing income statements for Aptil-July are: b. Sales are 20% for cash and 80% on accourt c. Sales on account are collected over a three-month penod with 10% collected in une month of sate; 70% collected in the first month following the month of sale, and the remaining 20% collected in the second month following the month of sale. Februarys sales totaled $205,000, and March's sales totaled $245,000 d Inventory purchases are paid for within 15 days. Therefore, 50N of a month's inventory purchases are paid for in the month of purchase. The remaining 50 is is paid in the following month. Accounts payable at March 31 for inventory purchases during March totai $104,300 c Each month's ending inventory must equal 20\% of the cost of the merchandse to be sold in the followng month. The mercharidise inventory ot March 31 is $71,400 t. Dividends of $29,000 wil be deciared and pald in Apri 9. Land costing $37,000 wili be purchased for cash in May h. The cash balance at March 31 is \$51,000, the company must maintain a cash balance of at least 540.000 at the end of each month 1. The company has an agreement with a local bank that atlows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance or $200,000. The interest rate on these loans is the per month and for simplicty we will assume that interest is not compounded. The company would, as fat as it is able, repoy the loan plus accumulated interest at the end of the quarter b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month perlod with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled \$205,000, and March's sales totaled $245,000 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 totai $104,300 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 $71.400 1. Dividends of $29,000 wili be deciared and paid in April. 9. Land costing $37,000 will be purchased for cash in May h. The cash balance at March 31 is $51,000; 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 each month, up to a total loan balance of $200,000. The interest rate on these loans is tor per month and for simplicity we will assume that interest is not compounded. The company would, as tar as it is able, repay the loan plus accumulated interest at the end of the quarter The company's president is interested in knowing how reducing inventory leveis and collecting accounts receivable sooner wilf impact the cast budget. He revises the cash collection and ending inventory assumptions as follows a. Sales contnue to be 20% for cash and 80% on credit Howevet, credit sales from April, May, and June are collected over a threemonth period with 25% coliected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale Credit sales from February and March are collected during the second quarter using the collection percentages specined in the main section. b. The company maintains its ending inventory levels for Aprit, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $71,400 and accounts payable for inventory purchases at March 3r remains $104,300 Requtred: 1. Using the presidents new assumptions in (a) above, prepare a schedule of expected cash collections for Aprii, Moy, and June and for the quarter in totai 2 Using the president's new assumptions in (b) above. prepare the followng for merchandise inventory: a. A merchandtre purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for Aprit, May. and June and far the quarter in lotal 3. Using the president's new assumptions, prepare a cash budget for Aprit, May, and June, and for the quarter in total Complete this question ty entering your answers in the tabs below. Required: 1. Using the president's new assumptoons in (a) above, prepare a schedule of expected cash collections for Apri, May, and June and for the quarter in total. 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory. a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total: 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total Complete this question by entering your answers in the tabs below. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total. 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for Requlred: the quarter in total 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total Complete this question by entering your answers in the tabs below. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory, a merchandise purchases budget for April, May, and June. Required: 1. Using the president's new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total. 2. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for Aprili, May, and June: b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total Complete this question by entering your answers in the tabs below. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory, a schedule of expected Cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. Using the president's new assumptions in (b) above, prepare the following for merchandise inventory? A merchandise purchases budget for April, May, and June A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total 3. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter In total. Complete this question by entering your answers in the tabs below. Using the president's new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total. (Cash deficiency, repayments and interest should be indicated by a minus sion.) "Includes $22,000 of depreciation each month