Note: Please help only with Required 2,3, and 4. The rest are confirmed correct.

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In 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 a master budget for the upcoming second quarter. To this end, you have worked with 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$15 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) March (actual) April (budget) May (budget) 22,200 28,200 42,200 67,200 102,200 June (budget) July (budget) August (budget) September (budget) 52,200 32,200 30,200 27,200 The concentration of sales before and during May is due to Mother's 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 $5.10 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: 4% of sales Variable: Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $ 310,000 $ 29,000 $ 128,000 $ 12,500 $ 4,100 $ 25,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $21,500 in new equipment during May and $51,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $23,250 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: $ 85,000 Assets Cash Accounts receivable ($42,300 February sales; $506,400 March sales) Inventory Prepaid insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings Total liabilities and stockholders' equity 548, 700 137,088 26,500 1,060,000 $ 1,857, 288 $ 111,000 23,250 1,020,000 703,038 $ 1,857,288 The company maintains a minimum cash balance of $61,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would 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 $61,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. C. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A 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. Determine any borrowing that would be needed to maintain the minimum cash balance of $61,000. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. Reg 1A Req 1B Req 1C Reg 1D Req 2 Req3 Reg 4 May Prepare a master budget for the three-month period ending June 30 that includes a sales budget, by month and in total. Sales Budget April June Quarter Budgeted unit sales 67,200 102,200 52,200 221,600 Selling price per unit 150 $ 15 $ Total sales 1,008,000 $ 1,533,000 $ 783,000 $3,324,000 $ 15 15 $ Reg 1A Req 1B Req 10 Req 1D Reg 2 Req3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash collections, by month and in total. February sales March sales April sales May sales June sales Total cash collections Earrings Unlimited Schedule of Expected Cash Collections April May June Quarter $ 42,300 0 0 $ 42,300 443,100 63,300 0 506,400 201,600 705,600 100,800 1,008,000 0 306,600 1,073,100 1,379,700 0 156,600 156,600 687,000 $ 1,075,500 $ 1,330,500 $ 3,093,000 0 Reg 1A Reg 1B Req 1C Req 1D Req 2 Req3 Reg 4 May Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget April June Quarter Budgeted unit sales 67,200 102,200 52,200 221,600 Add: Desired ending merchandise inventory 40,880 20,880 12,880 12,880 Total needs 108,080 123,080 65,080 234,480 Less: Beginning merchandise inventory 26,880 40,880 20,880 26,880 Required purchases 81,200 82,200 44,200 207,600 Unit cost $ 5.10 $ 5.10 $ 5.10 $ 5.10 Required dollar purchases $ 414,120 $ 419,220 $ 225,420 $ 1,058,760 Req 1A Req 1B Req 10 Req 1D Req 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash disbursements for merchandise purchases, by month and in total. Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May June Quarter Accounts payable $ 111,000 $ of $ 0 $ 111,000 April purchases 207,060 207,060 414,120 May purchases 209,610 209,610 419,220 June purchases 112,710 112,710 Total cash payments $ 318,060 $ 416,670 $ 322,320 1,057,050 0 0 0 0 Reg 1A Reg 1B Req 10 Req 1D Reg 2 Req3 Reg 4 $ 0 0 0 Prepare a master budget for the three-month period ending June 30 that includes a cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $61,000. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 April May June Quarter Beginning cash balance 85,000 Add collections from customers Total cash available 85,000 0 Less cash disbursements: Merchandise purchases Advertising 310,000 310,000 310,000 930,000 Rent 29,000 29,000 29,000 87,000 Salaries 128,000 128,000 128,000 384,000 Commissions Utilities 12,500 12,500 12,500 37,500 Equipment purchases Dividends paid Total cash disbursements 479,500 479,500 479,500 1,438,500 Excess (deficiency) of cash available over disbursements (394,500) (479,500) (479,500) (1,438,500) Financing: Borrowings Repayments Interest Total financing 0 $ Ending cash balance $ (394,500) $ (479,500) $ (479,500) (1,438,500) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Req 1A Req 1B Req 10 Req 1D Req 2 Req3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a budgeted income statement for the three- month period ending June 30. Use the contribution approach. Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Sales Variable expenses: 0 Fixed expenses: 0 0 0 Req 1A Reg 1B Req 10 Req 1D Reg 2 Req3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30. Earrings Unlimited Budgeted Balance Sheet June 30 Assets 0 Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity $ 0