Check my work 2 You have just been hired as a new management trainee by Earrings Unlimited a distributor of earrings 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 a master budget for the upcoming second quarter to this end, you have worked with accounting and other areas to gather the information assembled below The company sells many styles of earrings, but ait are sold for the same price-516 per palt. Actual sales of earrings for the last three months and budgeted sales for the next months follow (in pairs of earrings Print January (actual) February (actual) March (actual) April (dot) Hay budget 21,200 June (bunt) 27,200 July (budget) 41,200 August Chudget) 66,200 September budget) 101,200 53,200 31,200 29200 26,200 The concentration of sales before 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 carrings sold in the following month Suppliers are paid $4.60 for a pair of earings. One-hallota month's purchases paid for in the month of purchase the other half is paid for in the following month. Alles are on credit Only 20% of a month's sales are collected in the month of sale. An additional 70% collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible Monthly operating expenses for the company are given below Adurti Keel Sarie $ 250.000 $ 3,00 5,000 $ 10.00 Tuan $2.000 Insurance and on an annual in November of each The company to chase ST.000 in newcoment ng May and 500.000 woment during June; both purchases will be for cash. The company dividends of $19.500 cach quarter payable in the flesteronthathe followme quart The comparte eso Machigen bele The company maintains a minimum cash balance of $56,000. All borrowing is done at the beginning of a month any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. 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 $1.000), while still retaining at least $56.000 in cash Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 1. a. A sales budget, by month and in total b. A schedule of expected cash collections, 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 $56,000 3. A budgeted income statement for the three month perlod ending June 30. Use the contribution approach 4. A budgeted balance sheet as of June 30. Complete this question by entering your answers in the tabs below. Red Reg 13 Beg 1 Reg 10 Reg 2 Reg 3 Reg 4
