Nordic 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 March 31 (the end of the prior quarter), the companys balance sheet showed the following account balances:

Cash	$	10,000
Accounts receivable		52,800
Inventory		15,480
Buildings and equipment (net)		226,000
Accounts payable			$	21,600
Capital stock				130,000
Retained earnings				152,680
	$	304,280	$	304,280

b.	Actual sales for March and budgeted sales for AprilJuly are as follows:

March (actual)	$66,000
April	$86,000
May	$96,000
June	$101,000
July	$56,000

c.	Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.
d.	The companys gross margin percentage is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
e.	Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $8,000 per month; shipping, 6% of sales; advertising, $6,600 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter.
f.	Each months ending inventory should equal 30% of the following months cost of goods sold.
g.	Half of a months inventory purchases are paid for in the month of purchase and half in the following month.
h.	Equipment purchases during the quarter will be as follows: April, $10,000; and May, $8,000.
i.	Dividends totaling $2,500 will be declared and paid in June.
j.	Management wants to maintain a minimum cash balance of $8,000. 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 $20,000. 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.

Required:
Using the data above, complete the following statements and schedules for the second quarter:
1.	Schedule of expected cash collections:

Schedule of expected cash collections
	April	May	June	Total
Cash sales	$ 17,200	$	$	$
Credit sales	52,800
Total collections	$ 70,000	$	$	$

2a.	Merchandise purchases budget.(Input all amounts as positive values.)

Merchandise purchases budget
	April		May	June	Total
Budgeted cost of goods sold	$ 51,600		$ 57,600	$	$
(Click to select)DeductAdd: desired ending inventory	17,280
Total needs	68,880
(Click to select)AddDeduct: beginning inventory	15,480
Required purchases	$ 53,400		$	$	$

2b.	Schedule of expected cash disbursements for merchandise purchases:(Leave no cells blank - be certain to enter "0" wherever required.)

Schedule of cash disbursements for purchases
	April	May	June	Total
For March purchases	$ 21,600	$	$	$ 21,600
For April purchases	26,700	26,700		53,400
For May purchases
For June purchases
Total cash disbursements for purchases	$ 48,300	$	$	$

3.	Schedule of expected cash disbursements for selling and administrative expenses:

Schedule of cash disbursements for selling and administrative expenses
	April	May	June	Total
Salaries and wages	$ 8,000	$	$	$
Shipping	5,160
Advertising	6,600
Other expenses	3,440
Total cash disbursements for selling and administrative expenses	$23,200	$	$	$

4.

Cash budget.(Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed.)

Nordic Company
Cash budget
	April	May	June	Total
Cash balance, beginning	$ 10,000	$	$	$
Add cash collections	70,000
Total cash available	80,000
Less cash disbursements:
For inventory purchases	48,300
For selling and administrative expenses	23,200
For equipment purchases	10,000
For dividends
Total cash disbursements	81,500
Excess (deficiency) of cash	(1,500)
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance, ending	$	$	$	$

5.	Prepare an absorption costing income statement for the quarter ending June 30.(Input all amounts as positive values.)

Nordic Company Income Statement For the Quarter Ended June 30
(Click to select)Beginning inventoryAdvertisingSalesDepreciationNet operating income (loss)Ending inventoryGross marginGoods available for sale		$
Cost of goods sold:
(Click to select)DepreciationBeginning inventoryGoods available for saleEnding inventoryAdvertisingSalesGross marginNet operating income (loss)	$
(Click to select)Net operating income (loss)SalesDepreciationGross marginEnding inventoryPurchasesNet income (loss)Goods available for sales
(Click to select)Beginning inventoryDepreciationNet operating income (loss)AdvertisingPurchasesGoods available for saleNet income (loss)Gross margin
(Click to select)Ending inventoryBeginning inventoryPurchasesAdvertisingGross marginNet operating income (loss)DepreciationSales
(Click to select)Net income (loss)Net operating income (loss)Beginning inventoryGross marginEnding inventoryGoods available for saleSalesAdvertising
Selling and administrative expenses:
(Click to select)Salaries and wagesNet operating income (loss)Gross marginOther expensesAdvertisingShippingDepreciationGoods available for sale
(Click to select)AdvertisingShippingOther expensesGoods available for saleGross marginNet operating income (loss)Salaries and wagesDepreciation
(Click to select)Net operating income (loss)Salaries and wagesShippingGoods available for saleAdvertisingGross marginOther expensesDepreciation
(Click to select)Gross marginNet operating income (loss)ShippingDepreciationGoods available for saleAdvertisingOther expensesSalaries and wages
(Click to select)ShippingNet operating income (loss)Salaries and wagesAdvertisingGoods available for saleGross marginOther expensesDepreciation
(Click to select)Goods available for saleEnding inventorySalesNet operating income (loss)Beginning inventoryGross marginPurchasesAdvertising
(Click to select)Interest expenseAdvertisingGross marginEnding inventorySalesCost of goods manufacturedBeginning inventoryNet operating income (loss)
(Click to select)Goods available for saleGross marginNet income (loss)SalesEnding inventoryAdvertisingBeginning inventoryPurchases		$

6.	Prepare a balance sheet as of June 30.(Be sure to list the assets and liabilities in order of their liquidity.)

Nordic Company Balance Sheet June 30
Assets
Current assets:
(Click to select)Buildings and equipment, netAccounts receivableAccounts payableCashInventory		$
(Click to select)Accounts payableAccounts receivableBuildings and equipment, netCashInventory
(Click to select)Accounts receivableInventoryAccounts payableCashBuildings and equipment, net
Total current assets
(Click to select)Buildings and equipment, netInventoryAccounts payableCashAccounts receivable
Total assets		$
Liabilities and Stockholders Equity
Current liabilities:
(Click to select)Capital stockAccounts payableAccounts receivableCashBank loan payable		$
Stockholders' equity:
(Click to select)Capital stockAccounts payableAccounts receivableCashInventory	$
(Click to select)InventoryAccounts payableRetained earningsCashAccounts receivable
Total liabilities and stockholders equity		$