Master budget

Pad 1:16 AM 40%. D B Da ezto.mhecloud.mograw- hill.com/hm.tpx 0.19 C Search View Content Pr 3100-PracticeExa Budget Project Homework Help BUDGET: ACCO submit assignment save & exit points ted, a distributor of earrings to You have just been hired as a new management trainee by Earrings Unli various retail outlets located in shopping malls across the cou n the past, the company has done very little in the way of budgeting and at certain times 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. o this end, you have worked wi 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-S14 per pair. Actual sales o e last three months and budgeted sales for the next six months follow earrings fo n pairs of ea ngs January (actual 21,400 June (budget) 51.400 February (actual 27,400 July (budget 31.400 41,400 August (budget) March (actual 29.400 April (budget) 66,400 September (budget 26,400 May (budget 01.400 The concentration of sales before and during May is due to Mothers 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 $8 for a pair of earrings. One-half of a onth of s purchases is paid for in the purchase; the o er hal is paid for in e following month. All sales are on credit, with no d iscount, and payabl n 15 days. The company has found, h at only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following h, and the rem ng 10% is collected in the second month following sale. Bad debts have been negligible Monthly operating expenses for the company are given below: Variable 6% of sales Sales commissions Fixed 98,600 Advertising Rent 6,600 104,600 Salaries Utilities 5,600 Insurance 600 Depreciation 2,600 Insurance is paid on an annual basis, in November of each year The company plans to purchase $14,800 in new equipment during May and $38,600 in new equipment during June; both purchases will be for cash. The company declares dividends of $12,000 each quarte payable in the first month of the following quarter panys ledger accounts as of March 31 is given below. A listing of the com Assets Liabilities and Stockholders' Equity S 205.600 Cash 120,000 Accounts payable Accounts receivable ($38,360 February $463,680 March sales 502,040 Dividends payable 2,000 Sales nventory 212,480 Capital stock 940,000 22,400 Retained earnings Prepaid insurance 594.000 Property and equipment (net) 894,680 $1,751,600 Total liabilities and stockholders' equity S1,751,600 Total assets $55,000. All borrowing is done at the beginning of a The company maintains a minimum cash balance of month; any repayments are made at the end of a month $1,000 at The company has an agreement wi a bank that allows the company to borrow in incre the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will hat interest is not compounded. At the end of the quarter, the company would pay the bank al ents of $1,000), w the accumulated interest on the loa and as much of the loan as possible (in incre still retaining at least S55,000 in cash Prepare a master budget fo e three-month period ending June 30. Include the following detailed budgets