Problem 8-24 (Algo) Cash Budget with Supporting Schedules (LO8-2, LO8-4, LO8-8]Garden Sales, Ic., sells garden supplies. Management Is planning Its cash needs for the second quarter. The company usually has toborrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following Informationhas been assembled to assist in preparing a cash budget for the quarter:a. Budgeted monthly absorption costing Income statements for April-July are:April$ 650, e09 $ 820,000455, eeeJuly$ 430, eeeMayJuneSales$ 530,000Cost of goods soldGross marginSelling and administrative expenses:Selling expenseAdministrative expense*Total selling and administrative expenses574, e00371,800159, 000301,000195,e08246, 000129, 00083,e00102, 80064, 00043,00046, 500129,5e962,48939,20041,000164, 480193, 20e 84, 000Net operating income$ 65,se0 $81,600 $55,800 $45,eee*Includes $25,000 of depreclation each month.b. Sales are 20% for cash and 80% on account.c. Sales on account are collected over a three-month perlod with 10% collected In the month of sale; 70% collected In the first monthfollowing the month of sale; and the remalning 20% collected In the second month following the month of sale. February's salestotaled $245,000, and March's sales totaled $260,000.d. Inventory purchases are pald for within 15 days. Therefore, 50% of a month's inventory purchases are pald for In the month ofpurchase. The remalning 50% Is pald in the following month. Accounts payable at March 31 for Inventory purchases during Marchtotal $118,300.e. Each month's ending Inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandiseInventory at March 31 Is $91,000.f. Dividends of $32,000 will be declared and pald In Aprtl.g. Land costing $40,000 will be purchased for cash In May.h. The cash balance at March 31 Is $54,000; the company must malntaln a cash balance of at least $40,000 at the end of each month.I. The company has an agreement with a local bank that allows the company to borow In Increments of $1,000 at the beginning ofeach month, up to a total loan balance of $200,000. The Interest rate on these loans is 1% per month and for simplicity we willassume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated Interest at theend of the quarter.Required:1. Prepare a schedule of expected cash collections for April, May, and June, and for the quarter In total.2 Prepare the following for merchandise Inventory:a. A merchandise purchases budget for April, May, and June.b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June, and for the quarter In total.3. Prepare a cash budget for April, May, and June as well as In total for the quarter. Complete this question by entering your answers in the tabs below.Required 1Required 2ARequired 2BRequired 3Prepare a schedule of expected cash collections for April, May, and June, and for the quarter in total.Schedule of Expected Cash CollectionsiAprilMayJuneQuarterCash salesSales on account:FebruaryMarchAprilMayJuneTotal cash collectionsRequired 2A

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Problem 8-24 (Algo) Cash Budget with Supporting Schedules [LO8-2, LO8-4, LO8-8) Sarden Sales, inc., sells garden supplies. Management Is planning its cash needs for the second quarter. The company usually has to porrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following Information nas been assembled to assist In preparing a cash budget for the quarter: a. Budgeted monthly absorption costing Income statements for April-July are: April May $ 650, e00 $ 820,00e $ 530,0ge 574, e00 June July $ 430, eee 301, 000 Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense Total selling and administrative expenses 455, eee 371,000 195,e00 246, e00 159,800 129, e00 83,e00 192,e00 64, 000 43,000 46, 508 62,400 39,200 41,900 129,5e9 164,480 103,20e 84, 000 Net operating income 65, se0 $ 81,600 $ 55,80e $ 45, eee ncludes $25.000 of depreclation each month. Sales are 20% for cash and 80% on account. Sales on account are collected over a three-month perlod with 10% collected In the month of sale; 70% collected In the first month following the month of sale; and the remalning 20% collected In the second month following the month of sale. February's sales totaled $245,000, and March's sales totaled $260,000. Inventory purchases are pald for within 15 days. Therefore, 50% of a month's Inventory purchases are pald for In the month of purchase. The remaining 50% Is pald In the following month. Accounts payable at March 31 for Inventory purchases during March total $118,300. 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 Is $91,00. Dividends of $32,000 will be declared and pald In April. Land costing $40,000 will be purchased for cash In May. The cash balance at March 31 Is $54,000; the company must malntaln a cash balance of at least $40,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow In Increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The Interest rate on these loans is 1% 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.