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In: AccountingThe president of the retailer Prime Products has just approachedthe company’s bank with a request...The president of the retailer Prime Products has just approachedthe company’s bank with a request for a $89,000, 90-day loan. Thepurpose of the loan is to assist the company in acquiringinventories. Because the company has had some difficulty in payingoff its loans in the past, the loan officer has asked for a cashbudget to help determine whether the loan should be made. Thefollowing data are available for the months April through June,during which the loan will be used:A. On April 1, the start of the loan period, the cash balancewill be $33,400. Accounts receivable on April 1 will total$173,600, of which $148,800 will be collected during April and$19,840 will be collected during May. The remainder will beuncollectible.B. Past experience shows that 30% of a month’s sales arecollected in the month of sale, 60% in the month following sale,and 8% in the second month following sale. The other 2% is baddebts that are never collected. Budgeted sales and expenses for thethree-month period follow: April May June Sales (all on account) $302,000 $ 518,000 $ 277,000 Merchandise purchases $ 206,000 $134,500 $ 149,000 Payroll $ 29,800 $ 29,800 $ 24,500 Lease payments$ 28,200 $ 28,200 $ 28,200 Advertising $ 73,600 $ 73,600 $ 43,680Equipment purchases $ ? ? 98,000 Depreciation $ 20,800 $ 20,800 $20,800C. Merchandise purchases are paid in full during the monthfollowing purchase. Accounts payable for merchandise purchasesduring March, which will be paid in April, total $160,500.D. In preparing the cash budget, assume that the $89,000 loanwill be made in April and repaid in June. Interest on the loan willtotal $1,240.Required: 1. Calculate the expected cash collections for April,May, and June, and for the three months in total.2. Prepare a cash budget, by month and in total, for thethree-month period.