2 Preparing a financial budget Refer to Exercise 11 Clipboard Office Supply's sales are 75% cash and 25% credit.(Use the rounded sales values.) Credit sales are collected in the month after sale. Inventory purchases are paid 25% in the month of purchase and 75% the following month. Salaries and sales commissions are also paid half in the month earned and half the next month. Income tax is paid at the end of the year. If cash falls below $1,000, the company secures financing in $1,000 increments at an annual interest rate of 8%. Repayments of interest and principal are made as soon as excess cash is available. The April 30, 2011, balance sheet showed the following balances: Cash. $ 25,000 Accounts payable... $ 53,000 Salaries and commissions payable............ .$ 2,500 Requirements: 1. Prepare schedules of (a) budgeted cash collections, (b) budgeted cash payments for purchases, and (c) budgeted cash payments for operating expenses. Show amounts for each month and totals for May and June. Round your computations to the nearest dollar (Attention! The different requirement from Exercise 11). 2. Prepare a cash budget. If no financing activity took place, what is the budgeted cash balance on June 30,2011?1 Preparing an operating budget The budget committee of Clipboard Office Supply has assembled the following data. Clipboard Office Supply Budgeted Cost of Goods Sold May and June 2011 May June Beginning inventory $13,000 $22,100 Purchases 25,500 26,100 Goods available for sale 38,500 48,200 Ending inventory (22,100 (25,300) Cost of goods sold $16.400 $22.900 Sales in April were $50,000. You forecast that monthly sales will increase 2% over April's sales in May. June's sales will increase 2.4% over May's sales. Monthly salaries amount to $3,000. Sales commissions equal 4% of sales for that month. As the business manager, you must prepare the budgeted income statements for May and June 2011. Rent expense $2,600, paid as incurred Depreciation expense $300 Insurance expense $200, expiration of prepaid amount Requirements: Prepare Clipboard Office Supply's budgeted income statements for May and June. Round all amounts to the nearest $ 100. (Round amounts ending in $50 or more upward, and amounts ending in less than $50 downward.) For example, budgeted May sales are $51,000 ($50,000 x 1.02), and June sales are $52,200 ($51,000x1.024)