Insurance is paid on an annual basis, in November of each year. The company plans to purchase $21,000 in new equipment during May and $50,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $22,500 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: $ 84,000 Assets Cash Accounts receivable ($44,800 February sales; $537,600 March sales) Inventory Prepaid insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings Total liabilities and stockholders' equity 582,400 134,000 26,000 1,050,000 $ 1,876,400 $ 110,000 22,500 1,000,000 743,900 $ 1,876,400 The company maintains a minimum cash balance of $60,000. 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 $60,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 1. a. A sales 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 $60,000. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 1c Req 1D Reg 2 Req 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a sales budget, by month and in total. Budgeted unit sales Selling price per unit Sales Budget April May June Quarter 67,000 102,000 52,000 221,000 $ 16 $ 16 $ 16 $ 16 $ 1,072,000 $ 1,632,000 $ 832,000 $ 3,536,000 Total sales Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30. Earrings Unlimited Budgeted Balance Sheet June 30 Assets Total assets 0 Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $ 0
