Master Budget Problem CHECK FIGURES (2a) February purchases: $62,160.00 (3) February cash disbursements for purchases: $58,543.50 Franchesca Company, a merchandising company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter. a. As of December 31 (the end of the prior quarter), the company's balance sheet showed the following account balances: Cash Accounts receivable Inventory Buildings and equipment (net) Accounts payable Common stock Retained earnings 6,800 37,100 11,430 120,000 $32,980 100,200 $125.330 $15,330 b. Actual and budgeted sales are as follows: December (actual) $61,500 anuary February March April $80,500 $88,700 $89,200 $58,100 C. Sales are 30% for cash and 70% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin percentage is 30% of sales. (In other words, cost of goods sold e. Each month's ending inventory should equal 20% of the following month's budgeted cost of f. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other is 70% of sales.) goods sold. three-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory g. Monthly expenses are as follows: commissions, 15% of sales; rent, $2,650, other expenses excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,550 for the quarter and includes depreciation on new assets acquired during the quarter g. Equipment will be acquired for cash: $3,830 in January and $8,100 in February. h. Management would like to maintain a minimum cash balance of $5,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $50,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. 7-1 5. Prepare an absorption costing income statement for the quarter ending March 31 as shown in Schedule 9 in the chapter. 6. Prepare a balance sheet as of March 31