Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is pla

[answerhappygod]

Janus Products, Inc. is a merchandising company that sellsbinders, paper, and other school supplies. The company is planningits cash needs for the third quarter. In the past, Janus Productshas had to borrow money during the third quarter to support peaksales of back-toschool materials, which occur during August. Thefollowing information has been assembled to assist in preparing acash budget for the quarter: a. Budgeted monthly absorption costingincome statements for July to October are as follows: July AugustSeptember October Sales $56,000 $86,000 $66,000 $61,000 Cost ofgoods sold 30,400 48,400 36,400 33,400 Gross margin 25,600 37,60029,600 27,600 Selling and administrative expenses: Selling expense12,000 14,900 10,100 8,900 Administrative expense* 6,450 8,8007,700 7,500 Total selling and administrative expenses 18,450 23,70017,800 16,400 Net operating income $ 7,150 $13,900 $11,800 $11,200*Includes $2,800 depreciation each month. b. Sales are 20% for cashand 80% on credit. c. Credit sales are collected over a three-monthperiod, with 10% collected in the month of sale, 70% in the monthfollowing sale, and 20% in the second month following sale. Maysales totalled $46,000, and June sales totalled $52,000. d.Inventory purchases are paid for within 15 days. Therefore, 50% ofa month’s inventory purchases are paid for in the month ofpurchase. The remaining 50% are paid in the following month.Accounts payable for inventory purchases at June 30 total $19,700.e. The company maintains its ending inventory levels at 75% of thecost of the merchandise to be sold in the following month. Themerchandise inventory at June 30 is $26,000. f. Land costing $5,300will be purchased in July. g. Dividends of $1,800 will be declaredand paid in September. h. The cash balance on June 30 is $9,600;the company must maintain a cash balance of at least this amount atthe end of each month. i. The company has an agreement with a localbank that allows it to borrow in increments of $1,000 at thebeginning of each month, up to a total loan balance of $40,000. Theinterest 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 atthe end of the quarter.
Required:
1. Prepare a schedule of expected cash collections for July,August, and September and for the quarter in total.
2. Prepare the following for merchandise inventory:
a. A merchandise purchases budget for July, August, andSeptember.
b. A schedule of expected cash disbursements for merchandisepurchases for July, August, and September and for the quarter intotal.