i know its a big question but whoever is finishes good review will be given. i am trying to fill the one i got the answers wrong.

Knockoffs Unlimited. a nationwide distributor of low-cost imitation designer necklaces, has an exclusive 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 experienced a cash shortage. You have been given responsibility for all planning and budgeting Your rst assignment is to prepare a master budget for the next three months. starting April 1. You are eager to make a favourable impression on the president and have assembled the information below. The necklaces are sold to retailers for $10 each. Recent and forecast sales in units are as follows: January {actual} 27,500 June 65, 000 Fabrumrf'uY (actual) 41. 000 JulyY 45. 000 March (actual) 511, 000 August 113, 000 April BO. 000 September 40, 000 May 114, MN] The large buildup in sales before and during May is due to Mother's Day. Ending inventories should be equal to 40% of the next month's sales in units. The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% 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% ofa 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 4% of sales Fixed: advertising $245,000 Rant 25,500 Wages and salaries 124,000 Utilities 13,000 Insurance 6,000 Depreciation 29,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $22,000 in new equipment during May and $55,000 in new equipment during June: boil-I purchases will be paid in cash. The company declares dividends of $18,000 each quarter, payable in the rst month of the following quarter. The company's balance sheet at March 31 is given below: Assets Cash $ 39,000 Accounts receivable {$41,000 February sales; $432,000 March sales} 473,000 Inventory 123,000 Prepaid insurance 42,000 Fixed assets, net of depreciation 1,025,000 Total assets $1,?57,000 Liabilities and Shareholders' Equity Accounts payable 5 128,000 Dividends payable 18,000 Common shares 950,000 Retained earnings 660,200 Total liabilities and shareholders' equity $1,?57,000 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. 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. 9 Answer I: complete and correct. Budgeted sales in units 114,000 a 259,000 a Selling price per unit 10 10 Total sales $ 300,000 $ 1,140,000 $ 650,000 $ 2,590,000 b. A schedule of expected cash collections from sales, by month and in total. 0 Answer I: complete and current. Apri sales 1605100 9 550300 a 80,000 0 3005100 Tmashawawons c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. Answer is complete and correct. KNOCKOFFS UNLIMITED Merchandise Purchases Budget April May June Quarter Budgeted sales in units 80,000 114,000 65,000 259,000 Add: Budgeted ending inventory 45,600 V 26,000 18,000 18,000 Total needs 125,600 140,000 83,000 277,000 Less: Beginning inventory 32,000 45,600 26,000 32,000 Required unit purchases 93,600 94,400 57,000 245,000 Unit cost 4 4 $ 4 4 Required dollar purchases 374,400 $ 377,600 $ 228,000 $ 980,000d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 9 Answer Is complete and current. March purchases 0 120,000 a $ 120,000 Apri purchases 107,200 a 107,200 a 011,400 May purchases 100,000 a 100,000 a 0r?,000 1141,0009 114,000 June purchases Total cash disbursements $ 316,000 $ 3?6,000 x Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June Quarter Cash balance, beginning $ 89,000 $ 50,000 $ 50,000 x$ 89,000 Add receipts from customers 579,000 842,000 1,008,000 2,429,000 Total cash available 668,000 892,000 1,058,000 2,518,000 Less disbursements: Purchase of inventory 316,000 376,000 302,800 994,800 Advertising 245,000 245,000 245,000 735,000 Rent 25,500 25,500 25,500 76,500 Salaries and wages 124,000 124,000 124,000 372,000 Sales commissions 32,000 45,600 26,000 103,600 Utilities 13,000 13,000 13,000 39,000 Dividends paid 18,000 18,000 Equipment purchases 22,000 55,000 77,000 Total disbursements 773,500 851,100 791,300 2,415,900 Excess (deficiency) of receipts over disbursements (105,500) 40,900 266,700 102,100 Financing: Borrowings 157,071 10,778 X 167,849 X Repayments (167,849) x (167,849) X Interest 1,571) (1,678) (1,678) (4,928) X Total financing 155,500 9,100 (169,527) (4,928)3. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. x Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Income Statement For the Three Months Ended June 30 Sales revenue $ 2,590,000 Variable expenses: Cost of goods sold $ 1,036,000 Commissions V 103,600 1,139,600 Contribution margin 1,450,400 Fixed expenses: Advertising V 735,000 Rent 76,500 Wages and salaries 372,000 Utilities 39,000 Insurance 18,000 Depreciation 87,000 1,327,500 Operating income 122,900 Less interest expense (4,928) x Net income 117,9724. A budgeted balance sheet as of June 30. x Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Balance Sheet June 30 Assets Cash $ 97,172 X Accounts receivable 634,000 Inventory 72,000 Prepaid insurance V 24,000 Fixed assets, net of depreciation 1,015,000 Total assets $ 1,842,172 Liabilities and Shareholders' Equity Accounts payable, purchases $ 114,000 Dividends payable 18,000 Common shares 950,000 Retained earnings 760,172 X Total liabilities and shareholders' equity $ 1,842,172