Case 9-30 Master Budget with Supporting Schedules EARRINGS UNLIMITED Minimum ending cash balance $50,000 Selling price $10 Recent and forecast sales: January (actual) 20,000 February (actual) 26,000 March (actual) 40,000 April 65,000 May 100,000 June 50,000 July 30,000 August 28,000 September 25,000 Desired ending inventories (percentage 40% of next month's sales) Cost of earrings 4 Purchases paid as follows: In month of purchase 50% In following month 50% Collection on sales: Sales collected current month 20% Sales collected following month 70% Sales collected 2nd month following 10% Variable monthly expenses: Sales commissions (% of sales) 4% Fixed monthly expenses: Advertising 200,000 Rent 18,000 Salaries 106,000 Utilities 7,000 Insurance (12 months paid in November) 3,000 Depreciation 14,000 Equipment purchased in May 16,000 Equipment purchased in June 40,000 Dividends declared each quarter 15,000 Balance sheet at March 31: Assets Cash $74,000 Accounts receivable 346,000 Inventory 104,000 Prepaid insurance 21,000 Property and equipment (net) 950,000 Total assets $1,495,000 Liabilities and Stockholders' Equity Accounts payable $100,000 Dividends payable 15,000 Capital stock 800,000 Retained earnings 580,000 Total liabilities and stockholders' equity $1,495,000 Agreement with Bank: Borrowing increments $1,000 Interest rate per month 1% Repayment increments $1,000 Total of interest paid each quarter 100% Required minimum cash balance $50,000 Required: Prepare a master budget for the three-month period ending June 30. 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 purchase, 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 $50,000. 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.XX