KOFPS UNLIMITED Budgeted Balance Sheet 3-Jun CashAssets Accounts receivable Inventory Prepaidinsurance Fixed assets, net of depreciation Total assets Liabilities and Shareholders Equity Accounts payable, purchases Dividends payable Common shares Retainedearnings Total liabilities and stockhoider's equity KNOCKOFFS UNLIMITED Budgeted Income Statement For the Three Months Ended June 30 Sales revenue $2,650,000 Variable expenses: cost of goods sold Commissions Contribution margin Fixed expenses: Advertising Rent Wages and salaries Utilities Insurance Depreciation Operating income Less interest expense Income before tax For the Three Months Ending June 30 \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & & April & & May & & June & Quarter \\ \hline Cash balance, beginning & $ & 91,000 & $ & 50,000 & $ & 50,000 & 191,000 \\ \hline Add receipts from customers & $ & 599,000 & & 862,000 & & 1,028,000 & 2,489,000 \\ \hline Total cash available & & 690,000 & & 912,000 & & 1,078,000 & 2,680,000 \\ \hline \multicolumn{8}{|l|}{ Less disbursements: } \\ \hline Purchase of inventory & & 324,000 & & 384,000 & & 310,800 & 1,018,800 \\ \hline Advertising & & 251,000 & & 251,000 & & 251,000 & 753,000 \\ \hline Rent & $ & 26,500 & s & 26,500 & s & 26,500 & 79,500 \\ \hline Salaries and wages & $ & 126,400 & \$ & 126,400 & s & 126,400 & 379,200 \\ \hline Sales commissions & & 32,800 & & 46,400 & & 26,800 & 106,000 \\ \hline Utilities & \$ & 13,800 & $ & 18,800 & $ & 13,800 & 41,400 \\ \hline Dividends paid & & 18,400 & & & & & 18,400 \\ \hline Equipment purchases & & & & 22,800 & & 57,000 & 79,800 \\ \hline Totol disbursements & & 792,900 & & 870,900 & & 812,300 & 2,476,100 \\ \hline Excess (deficiency) of receipts over disbursements & & 102,900 & & 41,100 & & 265,700 & 203,900 \\ \hline \multirow{2}{*}{\multicolumn{8}{|c|}{\begin{tabular}{l} Borrowings \\ Repayments \end{tabular}}} \\ \hline & & & & & & & - \\ \hline \multicolumn{8}{|l|}{\begin{tabular}{l} Repayments \\ Interest \end{tabular}} \\ \hline \multirow{2}{*}{\multicolumn{8}{|c|}{\begin{tabular}{l} Total financing \\ Cash balance, ending \end{tabular}}} \\ \hline & & = & & + & & & \\ \hline Cash balance, ending & & & & & & & \\ \hline \end{tabular} 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 first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious 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 forecasted sales in units are as follows: 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 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% of a 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 sel ling and administrative expenses are given below: 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 $22,800 in new equipment during May and $57,000 in new equipment during June; both purchases will be paid in cash. The company declares dividends of $18,400 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is Riven below: The company wants a minimum ending cash balance e ach month of $50,000. All borrowing is done at the be ginning of the month, with any repayments made at the end of the month. The interest rate on the se loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month