H CASE 9-17 Master Bulot with Supporting Schedules |19 LOCI Knockoth Unlimited, a nationwide distributor of low cost imitation designer necklaces, has an euchnive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has cuperieneed a cash shortage. You have been ghen responsibility for all planning and budgeting. Your firm assignment is to prepare a master budget for the next three months, starting April 1. You are eager to make a favourable impresion on the president and have assembled the information below. The necklaces are sold so retailers for $10 cach. Recent and forecast sales In units are an follows: January (actual) 701000 June 50 000 February factual July March (actual ) 401000 Auguu 28000 April 65.050 Scpiccbar 25.010 May 100100 The large buildup in sales before and during May is due to Mother's Day. Ending imentories should be equal to 4% of the most month's sabre in units.The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 503: in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20%% of a month's sales are collected by month-end, An additional 70% is collected in the following month, and the remaining 10% is 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 It of sale Advertising $200.000 Rent 18 000 Wages and salaries 106.000 Utilities 7.000 Insurance 3.000 Depreciation 14,000All selling and administrative expooom are paid during the month in such. with the excepton of deprecicom and insurance. Iminnie is paid on in anaud basis, in November of each year. The company plans to purchase $16,000is new equipemi during May and $ 40,030 im now equipment during June both purchases will be paid in cash. The company declares dividends of $15,080 each quarter. paychild in the first month of the following quarior The company's balance show at March 3I is pawn bekar Accounts reachable ($16 010 Fetruary sikes 8350609 March wilds) Prepaid insurance Fiord maris, not of depreciating I bhaities and Shur holders' Equity Accounts payable Day unds payshly Common share Fellfood carning To abilities and shareholders' county DEThe company wants a minimum ending cash balance each month of $501000, All borrowing is done at the beginning of the Pape NO month, with any repayments made at the end of the month. The interest rate on these loans is I'S per month and must be paid at the end of each month based on the outstanding loan balance for that month. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets I. a A sales budget by month and in total. h A schedule of expected cash collections from sales, by month and in total. e 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. 3. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. 4. A budgeted balance sheet as of June 30