Only need answer for 4 - Please make notes or show calculations for how you got each answers in the income statement and balance sheet

3. A budgeted income statement for the three-month period ending June 30 - Use the contribution approach

4. A budged balance sheet as of June 30

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earring 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 comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. 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- $19 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)... 23,000 June (budget)... 53,000 February (actual)... 29,000 July (budget)... 33,000 March (actual)... 43,000 August (budget ... 31,000 April (budget)... 68,000 September (budget) 28,000 May (budget)... 103,000 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 $5.5 for a pair of earrings. One-half of a month?s purchases are paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that 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: Variable: Sales commissions..................4% of sales Fixed: Advertising.....................$350,000 Rent................................33,000 Salaries........................136,000 Utilities.........................14,500 Insurance......................4,500 depreciation.................29,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $23,500 in new equipment during May and $55,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $26,250 each quarter, payable in the first month of the following quarter. A listing of the company?s ledger accounts as of March 31 is given below: Assets Cash.............................................................................$ 89,000 Accounts Receivable($55,100 February sales; $653,600 March Sales)................................................................ 708,700 Inventory...................................................................... 149,600 Prepaid insurance......................................................... 28,500 Property and equipment(net)................................... 1,100,000 Total Assets................................................................. $2,075,800 Liabilities and Stockholders? Equity Accounts Payable.........................................................$ 115,000 Dividends Payable......................................................... 26,250 Common stock................................................................. 1,100,000 Retained Earnings......................................................... 834,550 Total liabilities and stockholders? equity $2,075,800 The company maintains a minimum cash balance of $65,000. 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 $65,000 in cash. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: Required Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: 1. a. A sales budget, by month and in total b. A schedule of expected cash collections from sales, 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.

3. A budgeted income statement for the three-month period ending June 30 - Use the contribution approach

4. A budged balance sheet as of June 30