Janus Products, Inc., is a merchandising company that sells binders,

Janus Products, Inc., is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products 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 the quarter:a. Budgeted monthly absorption costing income statements for July–October are as follows:July August September OctoberSales $ 53,000 $ 83,000 $ 80,000 $ 58,000Cost of goods sold 36,000 54,000 42,000 39,000Gross margin 17,000 29,000 38,000 19,000Selling and administrative expenses:Selling expense 7,100 10,600 9,400 8,900Administrative expense* 4,100 6,000 7,500 6,900Total selling and administrative expenses 11,200 16,600 16,900 15,800Net operating income $ 5,800 $ 12,400 $ 21,100 $ 3,200*Includes $1,200 depreciation each month.b. Sales are 20% for cash and 80% on credit.c.Credit sales are collected over a three-month period with 10% collected in the month of sale, 60% in the month following sale, and 30% in the second month following sale. May sales totaled $49,000, and June sales totaled $37,000.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 for inventory purchases at June 30 total $12,900.e.The company maintains its ending inventory levels at 80% of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $28,800.f. Land costing $5,300 will be purchased in July.g. Dividends of $1,300 will be declared and paid in September.h.The cash balance on June 30 is $6,000; 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.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, and September.b. A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total.c. Prepare a cash budget for July, August, and September and for the quarter in total. (Cash deficiency, repayments and interest should be indicated by a minus sign.)