Developing a Master Budgetfor a Merchandising Organization: Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.

Cash	$2,000	Accounts payable	$26,000
Accounts receivable	25,000	Dividends payable	17,000
Inventory	30,000	Rent payable	1,000
Prepaid Insurance	2,000	Stockholders' equity	40,000
Fixtures	25,000
Total assets	$84,000	Total liabilities and equity	$84,000

Actual and forecasted sales for selected months in 2010 are as follows:

January	$80,000
February	50,000
March	40,000
April	50,000
May	60,000
June	70,000
July	90,000
August	80,000

Monthly operating expenses are as follows:

Wages and salaries	$26,000
Depreciation	100
Utilities	1,000
Rent	1,000

Cash dividends of $17,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $2,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

FILL IN THE BLANKS: (a) Prepare a purchases budget for each month of the second quarter ending June 30, 2010.

Budgeted purchases	$________	$________	$________	$________

(b) Prepare a cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.

Total cash receipts	$________	$________	$________	$________

(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30, 2010. Do not include repayments of borrowings.

Total cash disbursements	$________	$________	$________	$________

(d) Prepare a cash budget for each month of the second quarter ending June 30, 2010. Include budgeted borrowings and repayments.

Only use negative signs, if needed, for:excess receipts over disbursements, balance before borrowings andcash balances (beginning and ending).

Cash balance, beginning	$________	$________	$________	$________
Receipts	________	________	________	________
Disbursements	________	________	________	________
Excess receipts over disb.	________	________	________	________
Balance before borrowings	________	________	________	________
Borrowings	________	________	________	________
Loan repayments	________	________	________	________
Cash balance, ending	$________	$________	$________	$________

(e) Prepare an income statement for each month of the second quarter ending June 30, 2010.

Only use negative signs to show net losses in income.

Sales	$________	$________	$________	$________
Cost of sales	________	________	________	________
Gross profit	________	________	________	________
Operating expenses:
Wages and salaries	________	________	________	________
Depreciation	________	________	________	________
Utilities	________	________	________	________
Rent	________	________	________	________
Insurance	________	________	________	________
Interest	________	________	________	________
Total expenses	________	________	________	________
Net income	$________	$________	$________	$________

(f) Prepare a budgeted balance sheet as of June 30, 2010.

Cash	$________	Merchandise payable	$________
Accounts receivable	________	Dividend payable	________
Inventory	________	Rent payable	________
Prepaid insurance	________	Loans payable	________
Fixtures	________	Interest payable	________
Total assets	$________	Stockholders' equity	$________
		Total liab. & equity	$________