Problem 8-24 (Algo) Cash Budget with Supporting Schedules [LOB-2, L08-4, LO8-8] 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 AprilJuly are: April May June July Sales 5 720,000 $ 090,000 $ 600,000 $ 500,000 Cost of goods sold 504,000 623,000 420,000 350,000 Gross margin 216,000 267,000 100,000 150,000 Selling and administrative expenses: Selling expense 90,000 109,000 71,000 50,000 Administrative expense* 50,000 60,000 44,000 48,000 Total selling and administrative expenses 140,000 177,000 115,000 98,000 Net operating income 5 76,000 5 90,000 S 65,000 $ 52,000 *lncludes $32,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a threemonth period with 10% collected in the month of sale; 70% collected in the rst month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled $280,000, and March's sales totaled $295,000. 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 $133,000. e. Each month's ending inventory must equal 20% of the cost ofthe merchandise to be sold in the following month. The merchandise inventory at March 31 is $100,800. f. Dividends of $39,000 will be declared and paid in April. 9. Land costing $47,000 will be purchased for cash in May. h. The cash balance at March 31 is $61,000; the company must maintain a cash balance of at least $40,000 at the end of each month. i. 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 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 ofthe quarter. 0 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2A Required 25 Required 3 Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deciency, repayments and interest should be indicated by a minus sign.) Beginning cash balance as 61,000 0 $ 40,700 0 $ 40,200 a $ 61,000 a Add collections from customers 411,600 9 699,600 0 781,600 0 1,892,800 0 Total cash available 472,600 740,300 821,800 1,953,800 Less cash disbursements: Purchases tor inventory 396,900 9 555,100 9 494,200 0 1,446,200 0 Selling expenses 90,000 0 109,000 0 71,000 0 270,000 0 Administrative expenses 18,000 9 36,000 0 12,000 0 66,000 0 Land purchases 0 9 47,000 9 0 0 47,000 0 Dividends paid 39,000 0 0 o 0 0 39,000 0 Total cash disbursements 543,900 747,100 577,200 1,868,200 Excess (deciency) of cash available over disbursements (71,300) (6,800) 244,500 85,600 Financing: Borrowings 112,000 9 47,000 0 0 0 159,000 0 Repayment (159,000) 0 (159,000) 0 interest 2,710 9 2,710 0 Total nancing 112,000 47,000 (156,290) 2,710 Ending cash balance $ 40,700 $ 40,200 $ 88,310 $ 88,310