Required : 1. Prepare a schedule of expected cash collections for April , May , and June , and for the quarter in total . [ 3 marks ] 2. Prepare a merchandise purchases budget for April , May , and June . [ 3 marks ] 3. Prepare a schedule of expected cash disbursements for merchandise purchases for April , May , and June , and for the quarter in total . [ 3 marks ] 4. Prepare a cash budget for April , May , and June as well as in total for the quarter . [ 6 marks ]

You are appointed as an accountant by Al Bussiteen Sales, Inc. that sells garden supplies. Management is planning its cash needs for the second quarter. The company usually must borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The head of department asked you to prepare a cash budget for the quarter. To this end, you have worked with accounting and other areas to gather the information assembled below: Budgeted monthly absorption costing income statements for April-July is: Sales Cost of goods sold Grossman April $540,000 $378,000 $162.000 May 5810,000 $567.000 $243.000 June $450,000 $315.000 $135.000 July $360,000 $252.000 $108,000 $80,500 Total selling and administrative expenses Net operating income $129,950 $65,783 $77,760 581.500 $113,050 $69.215 530.240 You have gathered the following additional information: 1. All sales are on credit. Only 10% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 2016 is collected in the second month following sale. February's sales totaled $180,000, and March's sales totaled $270,000 2. 50% of a mouth'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 $126,000 3. 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 - $84.400 4. Dividends of $40,000 will be declared and paid in April 5. Land costing S16,000 will be purchased for cash in May 6. Selling and administrative expense includes $20,000 of depreciation each month. 7. The cash balance at March 31 is 552,000, the company must maintain a cash balance of at least 530,000 at the end of each month. All borrowing is done at the beginning of a month any repayments are made at the end of the quarter & The company has an agreement with a local bank that allows the company to borrow any amount at the beginning of each month aftreme