CASE 8-33 Master Budget with Supporting Schedules LO8-2, LO8-4@, Lo8-8,LO8-9Lo8-10 You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail 0 outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgetin 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 a master budget for the upcoming second quarter. To this end, you have worked with accounting and other are to gather the information assembled below The company sells many syles of earrings, but all are sold for the same price-$10 per pair Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings) January factual) 20,000 June (budget) 50,000 February factual) 26,000 July (budget) 30,000 March (actual) 40.000 August (budget) 28.000 April (budget)65.000 September (budget) 25,000 May (budget) 100.000 The concentration of sales hefore and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Page 41 Suppliers are paid S4 for a pair of earrings One-halt 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. Only 20% of a month additional 70% s collected in the following nonth, and the remaining 10% s collected in the second month following sale. Bad debts have been negligible 's sales are collected in the month of sale. An