EARRINGS UNLIMITED
Selling price	$10
Actual and budgeted sales:
January (actual)	$20,000
February (actual)	26,000
March (actual)	40,000
April (budget)	65,000
May (budget)	100,000
June (budget)	50,000
July (budget)	30,000
August (budget)	28,000
September (budget)	25,000
Ending inventories as percentage of next month's sales	40%
Suppliers paid per earring	$4
Purchases paid in month of purchase	50%
Purchases paid in month following purchase	50%
Sales collected in month of sale	20%
Sales collected following month of sale	70%
Sales collected second month following sale	10%
Operating expenses:
Variable:
Sales commissions	4%
Fixed:
Advertising	$200,000
Rent	18,000
Salaries	106,000
Utilities	7,000
Insurance expired	3,000
Depreciation	14,000
New equipment purchase in May	$16,000
New equipment purchase in June	40,000
Dividends declared each quarter	15,000
Balance sheet at March 31:
Assets
Cash	$74,000
Accounts receivable ($26,000 February sales;	346,000
$320,000 March sales)
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
Minimum cash balance required	$50,000
Annual interest rate	12%
Check figures:
(1c) April purchases (units)	79,000
(2) June 30 cash balance	$94,700

EARRINGS UNLIMITED
Budgets for Quarter Ending June 30
	April	May	June	Quarter
Sales budget:
Budgeted Unit Sales	65,000	100,000	50,000	215,000
Selling Price per Unit	$10	$10	$10	$10
Total sales	$650,000	$1,000,000	$500,000	$2,150,000
	Correct!	Correct!	Correct!	Correct!
Schedule of expected cash collections:
February Sales	$26,000			$26,000
March Sales	280,000	$40,000		320,000
April Sales	130,000	455,000	$65,000	650,000
May Sales		200,000	700,000	900,000
June Sales			100,000	100,000
Total cash collections	$436,000	$695,000	$865,000	$1,996,000
	Correct!	Correct!	Correct!	Correct!
Budgeted merchandise purchases:
Budgeted Unit Sales	65,000	100,000	50,000	215,000
Add: Ending Inventory	40,000	20,000	20,000	20,000
Total Needs	105,000	120,000	62,000	227,000
Less: Beginning	26,000	40,000	20,000	26,000
Required Purchases	79,000	80,000	42,000	201,000
Cost of purchases at $4 per unit	$316,000	$320,000	$168,000	$804,000
	Correct!	Correct!	Correct!	Correct!
Expected cash payments for purchases:
Total cash payments
EARRINGS UNLIMITED
Cash Budget
For the Three Months Ending June 30
	April	May	June	Quarter
Cash balance, ending
EARRINGS UNLIMITED
Budgeted Income Statement
For the Three Months Ending June 30
Net income
EARRINGS UNLIMITED
Budgeted Balance Sheet
June 30
Assets
Liabilities and Stockholders' Equity
Total liabilities and stockholders' equity
Accounts receivable at June 30:
Total
Retained earnings at June 30:
Balance, June 30