The following data relates to the second quarter operations of Summer Games Ltd, a distributor of popular outdoor summer games, as of March 31st . 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 $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 the sale. The accounts receivable at March 31 st are a result of March credit sales. c) The companys gross margin is 40% of sales and cost of goods sold is equal to 60% 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 the 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 each month. An open line of credit is available at a local bank. All borrowing is done at the beginning of the month, and all repayments are made at the end of the 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. Page 3 of 3 Required: Using the data above, complete the following: 1. Sales Budget and Schedule of Expected Cash Disbursements 2. Merchandise Purchases Budget 3. Schedule of Expected Cash Disbursements Merchandise Purchases 4. Schedule of Expected Cash Disbursements Selling & Administrative Expenses 5. Cash Budget 6. Prepare an Absorption Costing Income Statement for the Quarter Ended June 30th 7. Prepare a balance sheet as of June 30th