Hammerly Corporation is preparing its m March 31. It sells a single product for $25 a unit. Budgeted sales are 40 credit. All credit sales are collected in the month following the four months follow: y Corporation is preparing its master budget for the quarter ending es are collected in the month following the sales, Budgeted sales for the next 1. Budgeted sales are 40% cash and 60% on Sales in Units ..... January 1,200 February March 1,000 1,600 April 1,400 At December 31, the balance in accounts receivable is $10,000, which represents the uncollected portion of December sales. The company desires merchandise inventory equal to 30% of the next month's sales in units. The December 31 balance of merchandise inventory is 340 units, and inventory cost is $10 per unit. Forty percent of the purchases are paid in the month of purchase and 60% are paid in the following month. At December 31, the balance of Accounts Payable is $8,000, which represents the unpaid portion of December's purchases. Operating expenses are paid in the month incurred and consist of: Sales commissions (10% of sales) Freight (2% of sales) Office salaries ($2,400 per month) Rent ($4,800 per month) Depreciation expense is $4,000 per month. The income tax rate is 40%, and income taxes will be paid on April 1. A minimum cash balance of $10,000 is required, and the cash balance at December 31 is $10,200. Loans are obtained at the end of a month in which a cash shortage occurs. Interest is 1% per month, based on the beginning of the month loan balance, and must be paid each month (The interest payment is rounded to the nearest whole dollar). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. At December 31, the loan balance is $0. Prepare a master budget (round all dollar amounts to the nearest whole dollar) for each of the months of January, February, and March that includes the: Sales budget - Schedule of cash receipts - Merchandise purchases budget Schedule of cash disbursements for merchandise purchases Schedule of cash disbursements for selling and administrative expenses Cash budget, including information on the loan balance 4. GENERAL AND ADMINISTRATIVE EXPENSE BUDGET Period 1 Period 2 Period 3 G & A EXPENSE 1 G & A EXPENSE 2 G & A EXPENSE 3 INTEREST EXPENSE (LONG TERM NOTES) = PROJECTED CASH G &A EXPENSES (to Cash Budget) DEPRECIATION EXPENSE (NONCASHI) = PROJECTED G & A EXPENSES (to income stmt) 5. EXPECTED CASH RECEIPTS FROM CUSTOMERS Period 1 Period 2 Period 3 BUDGETED SALES ENDING ACCOUNTS RECEIVABLE CASH RECEIPTS CASH SALES COLLECTION OF RECEIVABLES (Balance) COLLECTION, Month of Sale COLLECTION, 1st Month After Sale COLLECTION, 2nd Month After Sale COLLECTION, 3rd Month After Sale TOTAL CASH TO BE COLLECTED (to cash budget) (Note: look for breakdown of given balances) Hammerly Corporation is preparing its m March 31. It sells a single product for $25 a unit. Budgeted sales are 40 credit. All credit sales are collected in the month following the four months follow: y Corporation is preparing its master budget for the quarter ending es are collected in the month following the sales, Budgeted sales for the next 1. Budgeted sales are 40% cash and 60% on Sales in Units ..... January 1,200 February March 1,000 1,600 April 1,400 At December 31, the balance in accounts receivable is $10,000, which represents the uncollected portion of December sales. The company desires merchandise inventory equal to 30% of the next month's sales in units. The December 31 balance of merchandise inventory is 340 units, and inventory cost is $10 per unit. Forty percent of the purchases are paid in the month of purchase and 60% are paid in the following month. At December 31, the balance of Accounts Payable is $8,000, which represents the unpaid portion of December's purchases. Operating expenses are paid in the month incurred and consist of: Sales commissions (10% of sales) Freight (2% of sales) Office salaries ($2,400 per month) Rent ($4,800 per month) Depreciation expense is $4,000 per month. The income tax rate is 40%, and income taxes will be paid on April 1. A minimum cash balance of $10,000 is required, and the cash balance at December 31 is $10,200. Loans are obtained at the end of a month in which a cash shortage occurs. Interest is 1% per month, based on the beginning of the month loan balance, and must be paid each month (The interest payment is rounded to the nearest whole dollar). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. At December 31, the loan balance is $0. Prepare a master budget (round all dollar amounts to the nearest whole dollar) for each of the months of January, February, and March that includes the: Sales budget - Schedule of cash receipts - Merchandise purchases budget Schedule of cash disbursements for merchandise purchases Schedule of cash disbursements for selling and administrative expenses Cash budget, including information on the loan balance 4. GENERAL AND ADMINISTRATIVE EXPENSE BUDGET Period 1 Period 2 Period 3 G & A EXPENSE 1 G & A EXPENSE 2 G & A EXPENSE 3 INTEREST EXPENSE (LONG TERM NOTES) = PROJECTED CASH G &A EXPENSES (to Cash Budget) DEPRECIATION EXPENSE (NONCASHI) = PROJECTED G & A EXPENSES (to income stmt) 5. EXPECTED CASH RECEIPTS FROM CUSTOMERS Period 1 Period 2 Period 3 BUDGETED SALES ENDING ACCOUNTS RECEIVABLE CASH RECEIPTS CASH SALES COLLECTION OF RECEIVABLES (Balance) COLLECTION, Month of Sale COLLECTION, 1st Month After Sale COLLECTION, 2nd Month After Sale COLLECTION, 3rd Month After Sale TOTAL CASH TO BE COLLECTED (to cash budget) (Note: look for breakdown of given balances)