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	$	9,000
Accounts receivable		38,400
Inventory		12,240
Buildings and equipment (net)		208,000
Accounts payable			$	16,200
Capital stock				140,000
Retained earnings				111,440
	$	267,640	$	267,640

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

March (actual)	$48,000
April	$68,000
May	$78,000
June	$83,000
July	$38,000

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, $6,000 per month; shipping, 6% of sales; advertising, $4,800 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $4,000 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, $9,000; and May, $7,000.

i.

Dividends totaling $2,000 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.

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	$ 6,000	$	$	$
Shipping	4,080
Advertising	4,800
Other expenses	2,720
Total cash disbursements for selling and administrative expenses	$17,600	$	$	$

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	$ 9,000	$	$	$
Add cash collections	52,000
Total cash available	61,000
Less cash disbursements:
For inventory purchases	37,500
For selling and administrative expenses	17,600
For equipment purchases	9,000
For dividends
Total cash disbursements	64,100
Excess (deficiency) of cash	(3,100)
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)AdvertisingSalesEnding inventoryDepreciationBeginning inventoryNet operating income (loss)Gross marginGoods available for sale		$
Cost of goods sold:
(Click to select)Beginning inventoryGoods available for saleNet operating income (loss)Gross marginSalesDepreciationAdvertisingEnding inventory	$
(Click to select)Goods available for salesEnding inventoryPurchasesGross marginDepreciationNet operating income (loss)SalesNet income (loss)
(Click to select)Gross marginPurchasesNet operating income (loss)AdvertisingDepreciationGoods available for saleNet income (loss)Beginning inventory
(Click to select)PurchasesAdvertisingDepreciationEnding inventoryBeginning inventoryNet operating income (loss)Gross marginSales
(Click to select)Gross marginAdvertisingBeginning inventoryNet operating income (loss)Ending inventoryNet income (loss)Goods available for saleSales
Selling and administrative expenses:
(Click to select)ShippingDepreciationSalaries and wagesAdvertisingOther expensesGoods available for saleGross marginNet operating income (loss)
(Click to select)ShippingOther expensesAdvertisingSalaries and wagesDepreciationGross marginNet operating income (loss)Goods available for sale
(Click to select)Net operating income (loss)ShippingSalaries and wagesGoods available for saleOther expensesAdvertisingGross marginDepreciation
(Click to select)Salaries and wagesAdvertisingDepreciationNet operating income (loss)Gross marginShippingOther expensesGoods available for sale
(Click to select)DepreciationAdvertisingSalaries and wagesGoods available for saleOther expensesGross marginShippingNet operating income (loss)
(Click to select)PurchasesGross marginBeginning inventoryGoods available for saleEnding inventorySalesAdvertisingNet operating income (loss)
(Click to select)SalesInterest expenseGross marginBeginning inventoryAdvertisingCost of goods manufacturedNet operating income (loss)Ending inventory
(Click to select)Net income (loss)PurchasesSalesGross marginBeginning inventoryGoods available for saleAdvertisingEnding inventory		$

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)Accounts payableInventoryCashBuildings and equipment, netAccounts receivable		$
(Click to select)Accounts receivableCashInventoryBuildings and equipment, netAccounts payable
(Click to select)CashInventoryAccounts receivableBuildings and equipment, netAccounts payable
Total current assets
(Click to select)InventoryCashAccounts payableBuildings and equipment, netAccounts receivable
Total assets		$
Liabilities and Stockholders Equity
Current liabilities:
(Click to select)Bank loan payableCapital stockCashAccounts receivableAccounts payable		$
Stockholders' equity:
(Click to select)Accounts payableInventoryAccounts receivableCapital stockCash	$
(Click to select)InventoryAccounts payableCashAccounts receivableRetained earnings
Total liabilities and stockholders equity		$