Skolt Products, Inc., is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Skolt Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for July-October are as follows July August September October $55,000 $85,000 $65,000 $60,000 33,000 51,000 39,000 36,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 22,000 34,000 26,000 24,000 Selling expense Administrative expense 8,700 13,200 10,000 8,800 7.100 8.700 7,600 7.400 Total selling and administrative expenses 15,800 21,900 17,600 16,200 S 6,200 $12,100 $ 8,400 $ 7,800 Net operating income Includes $2,000 depreciation each month b. Sales are 20% for cash and 80% on credit. C. Credit sales are collected over a three-month period with 10% collected in the month of sale, 70% in the month following sale, and 20% in the second month following sale. May sales totaled $45,000, and June sales totaled $51,000 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 for inventory purchases at June 30 total $16,200 e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $24,750 f. Land costing $6,000 will be purchased in July g. Dividends of $1,400 will be declared and paid in September h. The cash balance on June 30 is $6,000; the company must maintain a cash balance of at least this amount at the end of each month i. The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 2% 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 of the quarter Required: 1. Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. (Do not round intermediate calculations.) Answer is complete and correct Skolt Products, Inc. Schedule of Expected Cash Collections Quarter - August September $ 11,000$ 17,000 13,000 41,000 Cash sales Credit sales ay June ,200 28,5 7,200 36,720 44,000 54,400 5,200 S 51,160 62,760 74,600 188,520 8,160 8.160 UI 4.400 . 30.800 8.800 6,80047,600 5.200 August September Total cash collections