Introduction: Create a master budget, proforma income statement, compute balances in select accounts and perform sensitivity analysis.Please use the Excel AC3250 CAT Student Template - W2019 file provided for this assignment.

Instructions: Borrowing will occur if an amount is below $80,000.Repayments and interest are paid when a balance is above $80,000.

Sunny Days manufactures patio furniture.April Day, the company treasurer, has provided the following information and is requesting you to create master budget for Sunny Days for the first quarter of 201X (current year).

Balances in selected accounts on January 1, 201X (current year):

Cash $80,000

Accounts Receivable $140,000

Inventory $105,000

Accounts Payable $65,000

Other Information: Sales for January (current year) are budgeted to be $300,000

a. Percentage increase in sales for each month will be 5%

b. Cost of Goods Sold 50%

c. Sales are 60% cash

d. Credit sales are collected:

50% In the month of sale

40% In the month following sale

10% In the second month following sale

e. The net Accounts Receivable on January 1 (current year) is comprised of $125,000 from December 201X (previous year) sales, and $15,000 from November 201X (previous year) sales.

f. Ending inventory for each month should equal 70% of the following month's budgeted Cost of Goods Sold.

g. Sixty percent (60%) of a month's inventory purchases are paid in the month of purchase; 40% in the first month following sale.

h. Monthly expenses.Commissions, rent, and operating expenses are paid in the month incurred.

Commission3% of sales Rent per month $5,000 Depreciation per month $2,500 Operating expenses excluding depreciation is equal to30% of sales

i. The company building will require repairs costing $200,000.The work is expected to be paid in February (current year).The repairs will not increase the value of the building

j. The company prefers to increase minimum cash balance equal to $80,000.If cash falls below this amount, funds need to be borrowed to meet this requirement.All borrowing occurs at the beginning of a month.Interest on the loan is 6% per year or 0.5% per month.Any balance above minimum balance is to be used to pay any outstanding loans, and interest is to be paid first.Interest is computed on all outstanding amounts for a month.The outstanding amount of financing includes beginning balance for the month plus any new borrowing for the month and any unpaid interest.When balance of cash is above $80,000 the amount of unpaid interest outstanding from previous months is paid first, interest from the current month is paid next.Any remaining cash above $80,000 is used to pay principle amount of the loan.The amount of payment for a month includes payment of unpaid interest and any payment on principle.The amount for interest under financing is only for the amount of interest computed for the current month.Interest on the income statement should include all interest paid for the six month period.