CHECK FIGURE

$(2)$

$(3)$

June ending cash balance: $$10,730$;

Net income: $$151,880$

You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor ofa designer's silk ties. The

company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has

become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your

first assignment is to prepare a master budget for the next three months, starting April $1.$ You are anxious to make a favourable impression

on the president and have assembled the information below.

The company desires a minimum ending cash balance each month of $$10,000.$ The ties are sold to retailers for $$8$ each. Recent and

forecasted sales in units are as follows:January $($actual$)$

February $($actual$)$

March $($actual$)$

April

May

June

July

August

September

$20,000$

$24,000$

$28,000$

$35,000$

$45,000$

$60,000$

$40,000$

$36,000$

$32,000$

The large buildup in sales before and during June is due to Father's Day. Ending inventories are supposed to equal $90\%$ of the next

month's sales in units. The ties cost the company $$5$ each.

Purchases are paid for as follows: $50\%$ in the month of purchase and the remaining S$0\%$ in the following month. All sales are on

credit, with no discount, and payable within $15$ days. The company has found, however, that only $25\%$ of a month's sales are

collected by month$-$end. An additional $50\%$ are collected in the following month, and the remaining $25\%$ are collected in the second

month following sale. Bad debts have been negligible.The company's monthly selling and administrative expenses are given below:

Variable:

Sales commissions

Fixed:

Wages and salaries

Utilities

Insurance

Depreciation

Miscellaneous

A

$$1$ per tie

$$22,000$

$$14,000$

$$1,200$

$$1,500$

$$3,000$

All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land

will be purchased during May for $$25,000$ cash. The company declares dividends of$$12,000$ each quarter, payable in the first month of the

following quarter. The company's balance sheet at March $31$ is given below:Cash

Accounts receivable $($$$48,000$

February sales, $$168,000$ March sales$)$

Inventory $(31,500$ units$)$

Prepaid insurance

Fixed assets, net of depreciation

Total assets

Accounts payable

Dividends payable

Common shares

Retained earnings

Assets

Total liabilities and shareholders' equity

Liabilities and Shareholders' Equity

$ $14,000$

$216,000$

$157,500$

$14,400$

$172,700$

$$574600$

$ $85,750$

$12,000$

$300,000$

$176850$

$$574600$The company has an agreement with a bank that alows it to borrow in increments of $ $1,000$ at the beginning of each month, up to a total

loan balance ofS$140,000.$ 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 S$1,000),$ while still retaining at least $$10,000$ in cash.

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 purchases, by month and in total.

$2.$ A cash budget. Show the budget by month and in total. how to calculate borrowing for all three months and interest rate. show proper calculation