The following data relate to the second quarter operations of Leisure Sports, a wholesale distributor of consumer sporting goods, as of March 31: Cash 9 000 Accounts receivable 48 000 Inventory 12 600 Building and equipment, Net 214 100 Accounts payable 18 300 Common shares 190 000 Retained earnings 75 400 a. Actual sales for March and budgeted sales for April through July are as follows: March (Actual) 60 000 April 70 000 May 85 000 June 90 000 July 50 000 b. Sales are 20% cash and 80% credit. Credit sales are collected in the month following sales. The accounts receivable at March 31 are a result of March credit sales. c. The companys 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 months ending inventory should equal 30% of the following months cost of goods sold. f. One-half of a months 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. 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

1. Prepare a schedule of cash collections. (5points) 2. Prepare a merchandise budget. (10 points) 3. Prepare a schedule of expected cash disbursements. (5 points) 4. Complete the companys cash budget. (10 points