Problem $7-5$ Preparing a Cash Budget with Supporting Schedules $($LO$2-$ CC$6,8,13)($Algo$)$

Green Lawn Company sells garden supplies. Management is planning its cash needs for the second quarter. The following

information has been assembled to assist in preparing a cash budget for the quarter:

a$.$ Budgeted monthly income statements for July to October are as follows:

$*$Includes $$10,000$ in depreciation each month.

b$.$ Sales are $20\%$ for cash and $80\%$ on account.

c$.$ Sales on account are collected over a three$-$month period in the following ratio: $10\%$ 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. May's sales totalled $$330,000,$ and June's sales totalled $$410,000.$

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 at June $31$ for inventory purchases

during June total $$121,200.$

e$.$ At the end of each month, inventory must be on hand equal to $20\%$ of the cost of the merchandise to be sold in the

following month. The merchandise inventory at June $30$ is $$87,600.$

f$.$ Dividends of $$67,100$ will be declared and paid in July.

g$.$ Equipment costing $$23,400$ will be purchased for cash in August.

h$.$ The cash balance at June $30$ is $$58,600$; the company must maintain a cash balance of at least $$46,000$ at all times.

i$.$ The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in

multiples of $$1,000.$ Interest is due only when principal is repaid and is calculated on the amount of repayment for the

duration of the time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are

made at the end of a month. The annual interest rate is $12\%.$ Compute interest on whole months $,$ and so forth$).$