Prepare an absorption costing income statement for the quarter ended March 31.

One-quarter of a month’s inventory purchases is paid for in the month of purchase; the other three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory.
f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter.
g. Equipment will be acquired for cash: $3,000 in January and $8,000 in February.
h. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. 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.
Using the data above:
1. Complete the following schedule: Schedule of Expected Cash Collections
2. Complete the following:
Merchandise Purchases Budget
Schedule of Expected Cash Disbursements Merchandise Purchases
3. Complete the following schedule:
Schedule of Expected Cash Disbursements Selling and Administrative Expenses
4. Complete the following:
Cash budget:
5. Prepare an absorption costing income statement for the quarter ended March 31.
6. Prepare a balance sheet as of March 31.
Can you explain how you get each answer for the Schedule of Expected Cash Disbursements Merchandise Purchases, Schedule of Expected Cash Disbursements Selling and Administrative Expenses, and The Cash Budget?

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