Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question JB Materials Co. is a distributor that sells binders, paper and other school supplies. The company is planning its cash needs fo the third quarter. In the past, JB has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following information has been assembled to assist in preparing a cash budget for O the quarter: loints a. Budgeted monthly absorption costing income statements for July to October are as follows: July August September October Sales $60, 000 $90, 000 $70, 000 $65, 000 Cost of goods sold 32, 000 50, 000 38, 000 35, 000 Gross margin 28, 000 40, 000 32, 000 30, 000 Selling and administrative expenses: Selling expense 13, 200 15, 700 10, 500 9,300 Administrative expense* 6, 650 9 , 200 8, 100 7, 900 Total selling and administrative expenses 19 , 850 24, 900 18, 600 17, 200 Net operating income $ 8, 150 $15, 100 $13, 400 $12, 800 *Includes $3,000 depreciation each month. Mc Graw Prev 1 of 4 Next >Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question *Includes $3,000 depreciation each month. b. Sales are 20% for cash and 80% on credit. joints c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% in the month following sale, and 20% in the second month following sale. May sales totalled $50,000, and June sales totalled $56,000. 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% are paid in the following month. Accounts payable for inventory purchases at June 30 total $21,700. e. The company maintains its ending inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $28,000. f. Land costing $5,500 will be purchased in July. g. Dividends of $2,000 will be declared and paid in September. h. The cash balance on June 30 is $10,000; the company must maintain a cash balance of at least this amount at the end of each month. i. The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000.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. Mc Graw Prev 1 of 4 Next > HillHelp Save & Exi Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate co Return to Required: 1. Prepare a schedule of expected cash collections for July, August and September and for the quarter in total. X Answer is not complete. points JB Materials Co. Schedule of Expected Cash Collections July August September Quarter Cash sales $ 8,600 X $ 14,600 X $ 10,600 X $ 33,800 X Credit sales: May 5,280 X 5,280 X June 27,300 X 6,240 X 28,080 X July 3,440 X #4,080 X 6,880 X August 5,840 X 40,880 X 4,240 X September 4,240 X $ 71,400 Total cash collections $ 44,620 $ 50,760 $ 62,6002. Prepare the following for merchandise inventory: a. A merchandise purchases budget for July, August and September. X Answer is complete but not entirely correct. JB Materials Co. Merchandise Purchases Budget July August September Budgeted cost of goods sold $ 25,200 X $ 43,200 X $ 31,200 X Add: Desired ending inventory 32,400 X 23,400 21,150 X Total needs 57,600 X 66,600 52.350 Deduct: Beginning inventory V 19,500 32,400 X 23,400 & $ 38, 100 X $ 34,200 X $ 28,950 8 Required inventory purchasesdoes not indica Retu x Answer is not complete. JB Materials Co. Cash Budget For the Quarter Ended September 30 July August September Quarter Cash balance, beginning $ 8,300 X Add: Collections from sales 39, 160 X Total cash available 47,460 Deduct: Disbursements: Administrative expenses 3,650 Inventory purchases 32,250 X Selling expenses 8,100 X Dividends 4,650 X Land 48,650 0 Total disbursements Excess (deficiency) of cash available over disbursements (1, 190) XSaved Help Save & Ex Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate co Return to Administrative expenses 3,650 Inventory purchases V 32,250 X Selling expenses 8, 100 X Dividends Land 4,650 X oints OV Total disbursements 48,650 0 0 0 Excess (deficiency) of cash available over disbursements (1,190) X Financing: Borrowings 10,000 X Interest OV Repayments V 10,000 0 0 Total financing 8.810 X