The following data relate to the second quarter operations of Leisure Sports, a wholesale distributor of consumer sporting goods, as of March 31: Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common shares Retained earnings $ 9,000 48,000 12,600 214, 100 18,300 190,000 75, 400 a. Actual sales for March and budgeted sales for April through July are as follows: March (actual) April May June July $60,000 70,000 85,000 90,000 50,000 b. Sales are 20% cash and 80% credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. c. The company's gross margin is 40% of sales. d. Monthly expenses are as follows: salaries and wages $7,500 per month; shipping, 6% of sales; advertising, $6,000 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $6,000 in total for the quarter. e. Each month's ending inventory should equal 30% of the following month's cost of goods sold. f. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. g. Equipment costing $11,500 will be purchased for cash in April and $3,000 will be purchased for cash in May. g. Equipment costing $11,500 will be purchased for cash in April and $3,000 will be purchased for cash in May. h. Dividends of $3,500 will be declared and paid in June. i. The company must maintain a minimum cash balance of $8,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month. Q 2-b. Schedule of expected cash disbursementsMerchandise purchases: Answer is complete but not entirely correct. March purchases April purchases May purchases June purchases April $ 18,300 22,350 0 May June Quarter $ 0 $ 0 $ 18,300 22,350 0 44,700 22,950 X $ 22,950 X 51,900 0 23,400 23,400 $ $ 45,300 $ 46,350 138,300 0 Total disbursements $ 40,650 4. Cash budget: (Round your intermediate calculations and final answers to the nearest whole dollar. Also, round up your interest calculations to the next whole dollar amount. Cash deficiency, repayments and interest should be indicated by a minus sign.) Answer is complete but not entirely correct. May June Quarter Cash Budget Cash balance, beginning Add cash collections April 9,000 $ $ 8,050 X $ 62,000 8,350 X $ 73,000 81,350 86,000 9,000 221,000 230,000 Total cash available 71,000 94,050 40,650 48,300 49,350 138,300 20,500 22.000 22,500 65,000 11,500 3,000 0 looooo 14,500 0 3,500 75,350 Less cash disbursements: For inventory purchases For selling and administrative expenses For equipment purchases For dividend payments Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Cash balance, ending 72,650 (1,650) 73,300 8,050 3,500 221,300 8,700 18,700 10,000 X 10,000 0 0X 0 0X 0 x 0 (10,000) X (300) X (10,300) 8,400 $ (10,000) (300) (300) 8,400 0 10,000 8,350 $ $ 8,050 $ LEISURE SPORTS Income Statement For the Quarter Ended June 30 $ 245,000 $ 12,600 143,400 156,000 9,000 Sales Cost of goods sold: Beginning inventory Add purchases Goods available for sale Ending inventory Gross margin Less Operating expenses: Salaries and wages Shipping Advertising Other expenses Depreciation 147,000 98,000 22,500 14,700 18,000 9,800 6,000 Operating income Interest expense Net income 71,000 27,000 300 X 26,700 $ LEISURE SPORTS Balance Sheet June 30 Assets $ Current assets: Cash Account receivable Inventory 8,400 72,000 9,000 Total current assets 89,400 Total assets $ 89,400 Liabilities and Stockholders' Equity Stockholders' equity: 0 Total liabilities and stockholders' equity $ 0