Carter Corporation prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter of 2019: Actual sales for March and budgeted sales for the next four months are as follows: a. March $120,000 150,000 160,000 100,000 110,000 April ay June July b. The company's gross profit rate is 44 percent of sales. c. Monthly expenses are budgeted as follows: salaries and wages, $12,000 per month; advertising, $15,000 per month; utilities, 2 percent of sales; depreciation, $7,500 per month; other expense, 4 percent of sales; and rent, S17,000 per month. d. At the end of each month, inventory is to be on hand equal to 25 percent of the following month's sales needs, stated at cost. One half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. f. Sales are 20 percent for cash and 80 percent on credit. All credit sale terms are n/30; therefore, accounts are collected the month following sale. The accounts receivable at March 31 are a result of March credit sales. g. As of March 31, 2019 (the end of the prior quarter), the company's general ledger showed the following account balances: . Debits $24,000 86,000 25,000 99,000 Credits Cash Accounts Receivable Inventory Plant and Equip (net) Accounts Payable Capital Stock Retained earnings $50,000 125,000 59,000 $234,000 $234,000 h. During May, the company will purchase a new copy machine for $2,000 cash. During June, other equipment will be purchased for cash at a cost of $20,000. Assume there will be no equipment purchases in April 2019. i. During April, the company will declare and pay $14,000 in cash dividends. Assume no dividends will be paid in May or June of 2019. j. The company must maintain a minimum cash balance of $7,500. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at th beginning of a month, and all repayments are made at the end. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid at the end of each month. The interest rate is 12 percent per annum. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Prepare a budgeting spreadsheet that is interactive. It should automatically update when changes are made to the input data, such as changes in sales forecast, equipment purchases, etc. Spreadsheets Hints 1. Create a worksheet for inputs that includes all potential variables that can be changed. Label the worksheet tab as "inputs." 2. Create a worksheet for each of the different budgets. Label the tabs appropriately. The following budgets should be included: a. Sales Budget b. Inventory Purchases Budget c. Selling and Administrative Budget d. Cash Collections from Customers Schedule Cash Paid for Inventory Purchases Schedule f. Cash Budget g. Budgeted Income Statement h. Budgeted Balance Sheet 3. Each budget should: e. be on a separate worksheet have a heading centered over the rest of the budget that includes the following: a. b. Name of Company Name of Budget Date: "December 31, 2019" or "For the Quarter ended December 31, 2019 i. ii. i. be prepared on the monthly basis with a total column for the quarter. The budgeted income statement and budgeted balance sheet should be on the quarter basis (not monthly). All worksheets should be interactive (i.e. all worksheet pages except the Input worksheet, should be formula driven). We will use the following to grade the project: c. 4. 5. a. You will lose 10 points if you do not have separate worksheets for each budget. You will lose 15 points if the project is late. c. You will lose up to 20 points if your worksheets are not interactive. d. You will lose up to 20 points on layout. e. You will lose 15 points for not doing a cash budget. f You will lose 15 points for not doing a budgeted income statement. g. You will lose 15 points for not balancing your budgeted balance sheet. h. You will lose points based on accuracy also. Hints for Creating Interactive Cash Budget To calculate borrowings to the nearest thousands, you may use the ROUNDUP function. To calculate repayments, you may use the ROUNDDOWN function. 2