A budgeted income statement for the three-month period ending March 31. Use the contributuon approach.

You have just been hired as a new management trainee by Rainboots Inc., a distributor of low-cost rainboots to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming first quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of boots but all are sold for the same price $18.00 per pair. Actual sales of rainboots for the last three months and budgeted sales for the next six months follow (in pairs of boots): October (actual) November (actual) December (actual) January (budget) February (budget) 33,000 27,000 42,000 66,000 71,000 March (budget) April (budget) May (budget) June (budget) 64,000 55,000 58,000 37,000 15.0% Sufficient inventory should be on hand at the end of each month to supply in the following month. of the boots sold The Company pays suppliers $ 11.00 for a pair of boots. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found sales are collected as follows: 45% of a month's sales are collected in the month of sale 45% is collected in the following month 10% is collected in the second month following sale Monthly operating expenses for the company are given below: Variable: Sales Commissions 7% of sales Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $79,000 $84,000 $93,000 $19,000 $14,000 $18,000 Insurance is paid on an annual basis, on August 1st of each year. The company plans to purchase $75,000 in new equipment during Feburary a $42.000 in new equipment during March; both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter A listing of the company's ledger accounts as of December 31 is given below: ASSETS Cash Accounts Receivable Inventory Prepaid Insurance Property and Equip (net of depreciation) Total Assets $88,000 464,400 108.900 98,000 855,000 $1,614,300 Balance includes $48,600 in November sales and an additional $415,800 in December sales LIABILITIES & STOCKHOLDERS' EQUITY Accounts Payable Dividends Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity $250,800 15,000 750,000 598,500 $1,614,300 The company maintains a minimum cash balance of $45,000 The company has an agreement with a bank that allows the company to borrow cash at the beginning of each month. The interest rate on these loans is 1.25% per month and for simplicity we will assume that interest is not compounded. All borrowing is done at the beginning of a month; any repayments are made at the end of a month; the Company makes repayments in any month when the cash is available while still retaining at least $45,000 in cash. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan. Required: Prepare a master budget for the three-month period ending March 31. Include the following detailed budgets: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections from sales, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $45,000 3. A budgeted income statement for the three-month period ending March 31. Use the contribution approach. 4. A budgeted balance sheet as of March 31