How would the formulas look on excel (the cell), so that it flows through the workbook. You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain tmes of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have 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 follow (in pairs of earrings) $18 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months January (actual) February (actual) March (actual) Apri (budget) May (budget 22,800 June (budget) 28,800 July (budget) 42,800 August (budget) 67,800 September (budget) 102,800 52,800 32,800 30,800 27,800 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $5.4 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for 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 in the month of sale. An additional 70% s collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: 4% of sales Fixed Rent Salaries Utilities Insurance $ 340,000 $ 32,000 $134,000 S 14,000 S 4,400 S 28,000 Insurance is paid on an annual basis, in November of each year. Insurance is paid on an annual basis, in November of each year The company plans to purchase $23,000 in new equipment during May and $54,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $25,500 each quarter, payable in the first month of the following quarter A listing of the company's ledger accounts as of March 31 is given below Assets Cash Accounts recoivable ($51,840 February salos $616,320 March sales) $ 88,000 668,160 146.448 28,000 Prepaid insurance Property and equipment (net) Total assets 1,090 $2,020,608 Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings S 114,000 25,500 1,080,000 801,108 Total liabilities and stockholders' equity $2,020,608 The company maintains a minimum cash balance of $64,000. All borrowing is done at the beginning of a month; 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 and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $64,000 in cash. Required: 1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: a. A sales budget, by month and in total. Answer is complete and correct Sales Budget April May June Quarter Budgeted unit sales Selling price per unit Total sales 52,800223,400 18 950,400 S 4,021,200 18 $ 18 S 18 S $ 1,220,400 1,850,400 b. A schedule of expected cash collections from sales, by month and in total Answer is complete and correct Earrings Unlimited Schedule of Expected Cash Collections April May June Quarter February sales March sales April sales May sales June sales Total cash collections 51,840 539,280 244,080 51,840 616,320 1,220,400 1,665,360 90,080 1,607,400 $3,744,000 77,040 854,280 370,080 22,040 1,295,280 190,080 835,200$ 1,301,400 $ C. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost of purchases to 1 decimal place.) Answer is complete but not entirely correct Earrings Unlimi Merchandise Purchases Budget April June Quater Budgeted unit sales Add: Desired ending merchandise inventory Total needs Less: Beginning merchandise inventory Required purchases Unit cost Required dollar purchases 102,800 21,120 123,920 41,120 82,800 52,800 13,120 65,920 21,120 44,800 223,400 13,120 236,520 41,120 108,920 27,120 81,800 146,448X 90,072 5.4 447,120 S 241,920 S 486,389 5.4 $ 54 S S 441,720 d. A schedule of expected cash disbursements for merchandise purchases, by month and in total Answer is complete and correct Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April S 114,000 Ma June Quarter Accounts payable April purchases May purchases June purchases Total cash payments $ 114,000 41,720 223,560 223,5447,120 20,960 120,960 1,123,800 220,860 220,860 334,860 444,420 344,520 Answer is not complete Earrings Unlimited Cash Budget For the Three Months Ending June 30 April June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Merchandise purchases Advertising Rent Salaries Utilities Equipment purchases Dividends paid Total cash disbursements Excess (deficienay) of cash available over disbursements 0 Repayments Total financing Ending cash balance 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. Answer is not complete Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Sales Variable expenses: 0 Fixed expenses: 4. A budgeted balance sheet as of June 30. Answer is not complete Earrings Unlimited Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity