PROBLEM 8-24 Cash Budget with g Schedules LO8-2 @, LO8-4.L08-8 Garden Sales, Inc.. 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 April-July are: Sales Cost of goods sold Gross margin Selling and administrative expenses $600,000 $900,000 $500,000 $400,000 420,000 630,000 350,000 280,000 180,000 270.000 150,000 120000 79,000 120,000 62,000 51000 45,000 52.00041,000 38.000 Total selling and administrative expenses 124.000 172000 103,000 89,000 $ 56,000 98,000 47,000 $ 31,000 Selling expense Administrative expense Net operating income Includes $20.000 of depreciation each Sales are 20% for cash and 80% on account. Sales on account are collected over a three-month period 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 $200,000, and March's sales totaled $300,00o. Inventory purchases are paid for in 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 S126.000. b. c. d ach month's ending inventory must equal 20% of the cost of the merchandise to he sold in the following month. The e