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You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outets 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 shortoge of cash. Since you are well trained in budgeting. you have decided to prepare a master budget for the upcoming second quartec. To this end, you hove worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price-si1 per paic. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in poirs of earrings): The concentration of soies before and during May is due to Mother's Day. Sutficient inventory should be on hand at the end of each month to supply 40 of of the earrings sold in the following month. Suppliers are pald \$4.10 for a pair of earrings. One-haif of a month's purchases is paid for in the mionth of purchase: the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collectod in the socond month following sale. Bod debts have been negiligible. Monthly operating expenses for the company are given below Insurance is paid on an annual basis, in November of each year The company plans to purchase $16,500 in new equlpment during May and $41,000 in new equipment during June; both purchases will be for cosh. The company declares dividends of $15,750 eoch quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: The company maintains a minimum cash balance of \$51,000. All borrowing is done of the beginning of a months 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 ond for simplicity we will assume that interest is not compounded. At the end of the quarter, the compary would poy the bank all of the accumulated interest on the loan and as much of the foan as possible (in increments of $1,000), while stal retaining at least $51,000 in cash. Required: Prepore a master budget for the throe-month period ending June 30. Include the foliowing detalled schedules: 1. a. A sales budget by month and in total. b. A schedule of expected cash collections, by month and in total Required: Prepare a master budget for the three-month period ending June 30 . Include the following detailed schedules: 1. a. A soles 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 $51,000. 3. A budgeted income statement for the three-month period ending June 30 . Use the contribution approach. 4. A budgeted balance sheot as of June 30 . Complete this question by entering your answers in the tabs below. Prepare a master budget for the three-month period ending June 30 that includes a sales budget, by month and in total