Problem 8-24 (Algo) Cash Budget with Supporting Schedules (L08-2, L08-4. L08-8) Garden Sales, Incorporated, sells garden supplies, Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care 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 Apnl-uly are Apri S 770,000 $39.000 231 000 $930.000 651,000 279) 000 June $ 630,000 441,000 159.000 July $ 540,000 378,000 162,000 Sales Cost of goods sold GEOSS nacin Selling and administrative expenses Selling expense Administrative expenses Total selling and administrative expenses Net operating income includes $35.000 of depreciation each month 93.000 53,500 144 500 360 112.000 70.400 12400 199,00 74,000 45 800 119,000 50,200 54.000 51,000 105,000 $ 57,000 b/Sales are 20% for cash and 80% on account Sales, an 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 cales totaled $295.000, and Morch soles totaled $310,000 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% has paid in the following month Accounts payable on March 31 for inventory purchases during March total $140700/ e Each month ending inventory must equal 20% of the cost of the merchandise to be sold in the following month The merchandise Inventory a Morch 31 $107,800 1. Dividends of $42,000 will be declared ang paid in April 9. Land costing $50,000 will be purchased for cash in May The cash balance at March 31 is 564,000 the company must maintain a cash balance of at least $40.000 at the end of each month 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 1% per month and for simplicity we will ossume 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 quartet Required: 1. Prepare a schedule of expected cash collections for April May, and June and for the quarter in total 2. Prepare the following for merchandise inventory A merchandise purchases budget for April May, and June b. A schedule of expected cash disbursements for merchandise purchases for April May, and Jure, and for the quarter in total 3 Prepare a cash budget for April May, and June as well as in total for the quarter