Master Budget with Supporting Schedules You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributer of a designers silk ties. The company has an extensive franchise in the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. 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 1st. You are anxious to make favorable impression on the president and have assembled the information below. The company desires to maintain a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $9.00 each. Recent and forecasted sales in units are as follows: Month Units Month Units January Actual 20,000 June 60,000 February Actual 24,000 July 40,000 March Actual 28,000 August 35,000 April 35,000 September 30,000 May 42,500 October 30,000 The large buildup in sales before and during June is due to Fathers Day. Ending inventories are supposed to equal 90% of the next months sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 55% in the month of purchase and the remaining 45% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 30% of a months sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 20% is collected in the second month following sale. Bad debts have been negligible The companys monthly selling and administrative expenses are given below: Variable: Sales Commissions $1.00 per tie Fixed: Wages and Salaries $30,000 Utilities $14,000 Insurance $ 1,200 Depreciation $ 1,500 Miscellaneous $ 4,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. New fixtures will be purchased during May for $52,000 cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following calendar quarter. The company has an agreement with a bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $150,000. The interest rate on these loans is 12% per annum, and for simplicity, we will assume that interest is not compounded. On the last day of a calendar quarter, the company must 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 $10,000 in cash. The companys balance sheet at March 31st is shown below: Required: Prepare a master budget for the three-month period ending June 30th. Include the following detailed budgets / schedules: 1) A. Sales budget by Month and in total for the period. B. Schedule of expected cash collections from sales, by month and in total. C. Merchandise purchases budget in units and in dollars. Show the budget by month and in total. D. 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 for the quarter. Your master budget must be prepared in Excel. Please use a separate tab for each required budget listed above. However, you may choose to combine requirements 1C and 1D into single tab within your Excel workbook. Your submission to Canvas should be a single self-contained Excel workbook using formulas and references cells between workbook tabs professionally present with formatting, correct spelling, etc. You may include additional tabs / schedules beyond the items listed in the requirements as appropriate. Assets Cash.........................................................................................................$14,100 Accounts receivable.......................................................................................219,600 Inventory...................................................................................................157,500 Prepaid insurance ..........................................................................................14,400 Fixed assets, net of depreciation ........................................................................169,000 Total Assets............................................................................................. $574,600 Liabilities and Stockholders Equity Accounts payable................................................... ..................................... $77,175 Dividends payable..........................................................................................12,000 Capital stock............................................................................................... 300,000 Retained earnings......................................................................................... 185,425 Total liabilities and stockholders equity......................................................... $574,600