Question

managerial cost accounting, please help .. thank you

Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has 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 June July $ 620,000 $ 810,000 $ 520,000 $ 420,000 434,000 567,000 364,000294,000 186,000 243,000 156,000 126,000 Sales Cost of goods sold Gross margin Selling and administrative expenses : Selling expense Administrative expense* Total selling and administrative expenses Net operating income 82,000 101,000 46,000 61,600 128,000 162,600 $ 58,000 $80, 400 63,000 38,600 101,600 $ 54,400 42,000 40,000 82,000 $ 44,000 *Includes $24,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled $230,000, and March's sales totaled $255,000. 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 at March 31 for inventory purchases during March total $114,800. e. 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 $86,800. f. Dividends of $31,000 will be declared and paid in April. g. Land costing $39,000 will be purchased for cash in May. h. The cash balance at March 31 is $53,000; the company must maintain 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 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.

Answer 1

Required (1)

Schedule of Expected Cash Collection
Particulars	April	May	June	Quarter
Cash Sales	1,24,000	1,62,000	1,04,000	3,90,000
Sales on Account
February	46,000			46,000
March	1,78,500	51,000		2,29,500
April	49,600	3,47,200	99,200	4,96,000
May		64,800	4,53,600	5,18,400
June			41,600	41,600
Total cash collection	3,98,100	6,25,000	6,98,400	17,21,500

Required (2A)

Merchandise Purchase Budget
Particulars	April	May	June
cost of goods sold	4,34,000	5,67,000	3,64,000
Ending Inventory	1,13,400	72,800	58,800
Total need	5,47,400	6,39,800	4,22,800
Less:- Opening inventory	-86,800	-1,13,400	-72,800
Required Inventory Purchase	4,60,600	5,26,400	3,50,000

Required (2B)

Schedule of Expected Cash Disbursement for merchandise purchase
Particulars	April	May	June	Quarter
March Purchase	1,14,800			1,14,800
April Purchase	230300	230300		4,60,600
May Purchase		263200	263200	5,26,400
June Purchase			175000	1,75,000
Total Cash Disbursement	3,45,100	4,93,500	4,38,200	12,76,800

Required (3)

Garden Sales Inc
Cash Budget
For Quarter Ended June 30
Particulars	April	May	June	Quarter
Beginning Cash Balance	53,000	40,000	40,900	53,000
Add Collection from customer	3,98,100	6,25,000	6,98,400	17,21,500
Total Cash Available	4,51,100	6,65,000	7,39,300	17,74,500
Less Cash Disbursement
Purchase for inventory	3,45,100	4,93,500	4,38,200	12,76,800
Selling Expenses	82,000	1,01,000	63,000	2,46,000
Administrative Expenses	46,000	61,600	38,600	1,46,200
Land purchased	-	39,000	-	39,000
Dividend paid	31,000			31,000
Total Cash Disbursement	5,04,100	6,95,100	5,39,800	17,39,000
Excess (deficiency) of cash Available	-53,000	-30,100	1,99,500	35,500
Financing:
Borrowing	93,000	71,000	8,000	1,72,000
Repayment	-	-	-1,64,000	-1,64,000
Interest	-	-	-2,570	-2,570
Total Financing	93,000	71,000	-1,58,570	5,430
Ending Cash Balance	40,000	40,900	40,930	40,930