Problem 8-22 Cash Budget with Supporting Schedules [L08-2, L08-4, LO8 Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. company usually has to borrow money during this quarter support peak salos of lawn equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: a Budgeted monthly absorption costing income statements for April-July are: 690,000 860,000 570,000 470,000 Cost of goods sold 483,000 602.000 399,000 329,000 207.000 258,000 171.000 141.000 Selling and administrative expenses: Selling expense 87,000 106,000 68,000 47,000 Administrative expense 48,500 65,600 42,200 45,000 Total selling and administrative expenses 135,500 171,600 110,200 92,000 71,500 86,400 60,800 49,000 *Includes $29,000 of depreciation each month. b Sales are 20% for cash and 80% on account. c. Sales on account are collected over a ree-month period with collected in the month of sale; collected in the first month following the month sale; and the remaining 20% collected second month following the month sale. February's sales totaled $265,000, in the $280,000 and March's sales are d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases for in the month of purchase. The remaining 50% in the following month. Accounts payable at March 31 for inventory purchases total $126,700. 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 Dividends of $36,000 will be declared and paid in April. g Land costing $44,000 be purchased for cash in May. h. The cash balance at March 31 is $58.000; the company must maintain a cash balance of atleast $40,000 at the end of each month. i has an agreement with a local bank that the company to borrow in increments of $1,000 at the allows loans is 1% beginning of each month, up to a total loan balance of S200,000. The interest rate on these would, as per month and for simplicity we will assume that interest is not compounded. The company far as itis able, repay the loan plus accumulated interest at the end of the quarter. Required 1. Prepare a schedule of expected cash colleotions for April, May, and June, and for the quarter in total. Schedule of Expected Cash Collections