_.. ._ __..__.__ . . .. . .. . .-....., _.._ _.._ __..__......:, _-._ ._ __..__-__ _.._ ____.._..._..... __.._....._= _-._. Bad debts have sen'ngigiiiii H The company's monthly selling and administrative expenses are given below: 1.I"a.riable2 Sales commissions 4% of sales Fixed: Advertising $230, 000 Rent 23,000 Wages and salaries 110, 000 Utilities 11,000 Insurance 5,000 Depreciation 24, 000 All selling and administrative expenses are paid during the month, In cash, With the exception of depreciation and insurance. Insurance is paid on an annual basis, In November of each year The company plans to purchase $20,000 In new equipment during May and $50,000 in new equipment during June; both purchases will be paid In cash. The company declares dwidends of $13,000 each quarter, payable In the rst month of the followmg quarter. The company's balance sheet at March 31 is given below: Assets Cash $ 04, 000 Accounts receivable ($36, 000 February sales: $392, 000 March sales) 420, 000 Inventory 120, 000 Prepaid. insurance 35,000 Fixed. assets, net of depreciation 1,000,000 Total assets $10351 000 Liabilities and Shareholders' Equity Accounts payable $ 118,800 Diviiieniis payable 1?, 000 Common shares 900, 000 Retained. earnings 631,200 Total liabilities and. shareholders' equity $10351 000 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. Required: 1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: Required: 1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: a. A sales budget by month and in total. Sales budget April May June Quarter Budgeted sales in units 75,000 109,000 60,000 244,000 Selling price per unit 10 10 10 10 Total sales $ 750,000 $ 1,090,000 600,000 2,440,000 b. A schedule of expected cash collections from sales, by month and in total. KNOCKOFFS UNLIMITED Schedule of Expected Cash Collections April May June Quarter February sales $ 36,000 36,000 March sales 343,000 490,000 833,000 April sales 150,000 525,000 75,000 750,000 May sales 218,000 763,000 981,000 June sales 12,000 12,000 Total cash collections 759,000 $ 1,778,000 75,000 $ 2,612,0003. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach KNOCKOFFS UNLIMITED Budgeted Income Statement For the Three Months Ended June 30 Variable expenses: 0 Fixed expenses: 0 0 0Case 9-27 Master Budget with Supporting Schedules [LO2] knockoffs Unlimited, a nationwide distributor of low-cost imitation designer necklaces, has an exclusive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has experienced a cash shortage. You have been given esponsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are eager to make a favourable impression on the president and have assembled the information below. The necklaces are sold to retailers for $10 each. Recent and forecast sales in units are as follows: January (actual) 25, 000 June 60, 000 February (actual) 36, 000 July 40, 000 March (actual) 49, 000 August 38, 000 April 75, 000 September 35, 000 May 109, 000 The large buildup in sales before and during May is due to Mother's Day. Ending Inventories should be equal to 40% of the next month's sales in units. The necklaces cost the company $4 each. Purchases are paid for as follows: 50% In the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected by month-end. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. The company's monthly selling and administrative expenses are given below: Variable: Sales commissions 4% of sales Fixed: Advertising $230, 000 Rent 23, 000 Wages and salaries 118, 000 Utilities 11 . 000 Insurance 5, 000 Depreciation 24, 000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and Insurance. Insurance is paid on an annual basis, In November of each year. The company plans to purchase $20 000 In new equipment during May and $50 000 in new equipment during June both purchases will be naldd4. A budgeted balance sheet as of June 30. KNOCKOFFS UNLIMITED Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Shareholders' Equity Total liabilities and shareholders' equityC. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. KNOCKOFFS UNLIMITED Merchandise Purchases Budget April May June Quarter Budgeted sales in units 750,000 1,090,000 600,000 244,000 Add: Budgeted ending inventory 43,600 24,000 16,000 16,000 Total needs 793,600 1, 114,000 616,000 260,000 Less: Beginning inventory 36,000 13,600 24,000 36,000 Required unit purchases 757,600 1,070,400 592,000 224,000 Unit cost $ 4 $ 4 $ $ Required dollar purchases 6 3,030,400 $ 4,281,600 $ 2,368,000 896,000 d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. KNOCKOFFS UNLIMITED Schedule of Expected Cash Disbursements June Quarter March purchases 0 April purchases 0 May purchases 0 June purchases 0 Total cash disbursements 0 $ 0 $ 02. A cash budget. Show the budget by month and in total. (Round your Intermediate calculations and final answers to the nearest whole dollar. Also, round down your interest calculations to the next whole dollar amount. Cash deficiency, repayments and Interest should be indicated by a minus sign. Do not leave any empty spaces; input a 0 wherever It Is required.) KNOCKOFFS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June Quarter Cash balance, beginning Add receipts from customers Total cash available 0 0 0 Less disbursements: Purchase of inventory Advertising Rent Salaries and wages Sales commissions Utilities Dividends paid Equipment purchases Total disbursements 0 0 0 Excess (deficiency) of receipts over disbursements 0 0 Financing Borrowings Repayments Interest Total financing 0 0 0 0 Cash balance, ending 0 $ 0 $ 0 $