3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

I have completed it thus far:

Insurance is paid on an annual basis, in November of each year. The company plans to purchase $17,000 in new equipment during May and $42,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $16,500 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: $ 76,000 Assets Cash Accounts receivable ($31,680 February sales; $387,840 March sales) Inventory Prepaid insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings Total liabilities and stockholders' equity 419,520 109,872 22,000 970,000 $ 1,597,392 $ 102,000 16,500 840,000 638,892 $ 1,597,392 The company maintains a minimum cash balance of $52,000. All borrowing is done at the beginning of a month; any repavments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $52,000 in cash. Budgeted Income Statement For the Three Months Ended June 30 Sales Variable expenses: Fixed expenses: Earrings Unlimited Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $ Budgeted unit sales Selling price per unit Total sales Sales Budget April May 65,400 100,400 s 12 s 12 $ 784,800 $ 1,204,800 June 50,400 s 12 $ 604,800 Quarter 216,200 s 12 $ 2,594,400 February sales March sales April sales May sales June sales Total cash collections Earrings Unlimited Schedule of Expected Cash Collections April May June $ 31,680 339,360 48,480 156,960 549,360 78,480 240,960 843,360 120,960 | $ 528,000 $ 838,800 $ 1,042,800 Quarter $ 31,680 387,840 784,800 1,084,320 120,960 $ 2,409,600 June Earrings Unlimited Merchandise Purchases Budget April May Budgeted unit sales 65,400 100,400 Add: Desired ending merchandise inventory 40,160 20,160 Total needs 105,560 120,560 Less: Beginning merchandise inventory 26,160 40,160 Required purchases 79,400 80,400 Unit cost $ 4.20 $ 4.20 Required dollar purchases $ 333,480 $ 337,680 12,160 62,560 20,160 42,400 4.20 178,080 Quarter 216,200 12,160 228,360 26,160 202,200 $ 4.20 $ 849,240 $ $ Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May June Quarter Accounts payable | $ 102,000 $ 102,000 April purchases 166,740 166,740 333,480 May purchases 168,840 168,840 337,680 June purchases 89,040 89,040 Total cash payments $ 268,740 $ 335,580 $ 257.880 862.2001 Earrings Unlimited Cash Budget For the Three Months Ending June 30 April $ 76,000 $ 528,000 604,000 $ May 52,368 838,800 891,168 June 132,396 1,042,800 1,175,196 Quarter $ 76,000 2,409,600 2,485,600 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Merchandise purchases Advertising Rent Salaries Commissions Utilities 268,740 220,000 20,000 110,000 335,580 220,000 20,000 110,000 48,192 8,000 17,000 257,880 220,000 20,000 110,000 862,200 660,000 60,000 330,000 103,776 24,000 59,000 31,392 4 8,192_ 24,192| 8,000 8,000 42,000 Equipment purchases 16,500 674,632 (70,632) 758,772 132,396 682,072 493,124 16,500 2,115,476 370,124 Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance 123,000 (123,000) (3,690) (126,690) 366,434 123,000 (123,000) (3,690) (3,690) 366,434 123,000 52,368 0 132,396 $ $ $ $