Problem 9-23 Cash Budget with Supporting Schedules; Changing Assumptions [LO9-2, LO9-4, LO9-8] 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: April May June Sales $630,000 $ 1.130,00 $590,000 Cost of goods sold 441,000 791,000 413,000 Gross margin 189,000 339,000 177,000 Selling and administrative expenses: Selling expense 117,000 108,000 70.000 Administrative expense* 49,500 67,200 43.400 Total selling and administrative expenses 166,500 175,200 113,400 Net operating income $ 22,500 $ 163,800 $ 63.600 *Includes $31.000 of depreciation each month. b. Sales are 20% for cash and 80% on account. C. 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 $275.000, and March's sales totaled $290,000. d. Inventory purchases are paid for within 15 days. Therefore, 509% 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 $125.300. 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 $88,200. f. Dividends of $38,000 will be declared and paid in April. g. Land costing $46,000 will be purchased for cash in May