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Beauty Inc. is a merchandiser that sells spa products to the hotel industry (the company is not a manufacturer). The management of Beauty Inc. is planning its cash needs for the month of April. The following information has been assembled to assist in preparing a cash budget for April.

1. Budgeted monthly income statements for April and May are as follows:

	April	May
Sales	$470,000	$710,000
Cost of goods sold	336,000	504,000
Gross margin	134,000	206,000
Less: Operating expenses:
Selling expense	53,200	96,000
Administrative expense	46,000	41,600
Total operating expenses	99,200	137,600
Net income	$ 34,800	$ 68,400

1. Sales are 20% cash and 80% on account.
2. Sales on account are collected over a two-month period in the following pattern: 20% collected in the month of sale, 80% collected in the month following the sale. March sales totalled $300,000.
3. Inventory purchases are paid 50% in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March is $100,000.
4. At the end of each month, inventory must be on hand equal to 15% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $67,200.
5. Dividends of $90,000 will be declared and paid in April.
6. Land will be sold for$25,000 cash in April.
7. Selling and administrative expenses are paid when incurred. Administrative expenses include $25,000 of depreciation.
8. The cash balance at March 31 is $ 20,000

Required: (please show working)

1. Prepare a schedule of expected cash collections from sales for April,
2. Prepare the following for merchandise inventory:
   1. An inventory purchases budget for April
   2. A schedule of expected cash disbursements for inventory for April .

1. Prepare a cash budget for April. Comment on the company's cash position. Is there any action that should/can be taken?

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