Please help me with Case 9-27 pg 378 and 379. I need help in requirement 2) of the case to prepare cash budget. Kindly shows the budget by month and in total. Please explain your work with all steps and explanations.

378 Chapter 9 Budgeting CASES connect CASE 9-27 Master Budget with Supporting Schedules [L(2] Knockoffs Unlimited, a nationwide distributor of low-cost imitation designer necklaces, has an exclusive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has experienced a cash shortage, You have been given responsibility for all planning and budgeting. Your find assignment is to prepare a mas- lei budget for the next three months. starting April 1. You are eager to make a favourable impression on the president and have assembled the information below The necklaces are sold in retailers for $10 each. Recent and forecast sales in units are as follows: January facialhair.. 20.000 February factual) .never 26,000 March (actual) 40,0OD August.... .. ... April. . ... 65,000 September... . . ..... 25.000 May..... The large buildup in sales before and during May is due to Mother's Day. Ending inventories should be equal to 40% of the next month's sales in units. The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining SO 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 by month-end. An additional 70% is collected in the following month, and the remaining 10% is cal- Jected in the second month following sale. Bad debts have been negligible. The company's monthly selling and administrative expenses are given below: Variable: Sales commissions... 1670 45of sales Fixed: Advertising. $200,000 Rent . . . . .. ... Wages and salaries. 106.000 Utilities. 7,000 Insurance. ... 3.010 Depreciation. . .. All selling and administrative expenses are paid during the month, in cash. with the exception of depre. ciation and insurance, Insurance is paid on an annual basis, in November of each year. The company plans to purchase 516 010 in new equipment during May and $40,000 in new equipment during June; both purchases will be paid in cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below. Assets Accounts receivable (516,()) February sales; SAM1010 March salesh. . . 346.000 Inventory....-. 104:000 Prepaid insurance. . .- 21.000 Fixed assets, net of depreciation .. Total assets. . $1,495,000 Liabilities and Shareholders' Equity Accounts payable ... . ... 5 100,000 Dividends payable 15:001 Common shares . .... HOO.ITHI Retained earnings. Total liabilities and shareholders equity..... $1495,090 WWW.TEX-CETERAWSChapter 9 Budgeting 379 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: 1. 4. A sales budget by month and in total. b. A schedule of expected cash collections from sales, by month and in total. 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. 3. A cash budget. Show the budget by month and in total. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. 4. A budgeted balance sheet as of June 30. CASE 9-28 Critiquing a Report; Preparing Spending Variances [LO3, LO4) Farrar University offers an extensive continuing education program in many cities throughout the prov- ince. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool operated with 20 vehicles until February, when an additional automobile was acquired at the request of the university administration. The motor pool furnishes gasoline, oil, and other supplies for its automobiles, A mechanic does routine maintenance and minor repairs. Major re- pairs are performed at a nearby commercial garage. Each year, the supervisor of the motor pool prepares an annual budget, which is reviewed by the university and approved after suitable modifications. The following cost control report shows actual selling and administrative costs for March of the current year compared to 1/12 of the annual budget: FARRAR UNIVERSITY MOTOR POOL Cost Control Report For the Month Ended March 31 Monthly Annual Budget (1/12 of March (Over) Under Budget Annual Budget) Actual Budget Kilometres . . it.until 600,000 50,000 58,000 Autos. . .. .did.terms.... ..it 20 20 21 Gasoline . .. . ..firstit $ 96,000 $ 8,000 $ 8.970 $ (970) Oil, minor repairs, parts.... . . .. . . 30,000 2.500 2,840 (340) Outside repairs. 9,600 8OO 980 (180) Insurance .... . ..it 18,000 1,500 1.625 125) Salaries and benefits . 103,320 8.610 8.610 Vehicle depreciation. 48,000 4.200 (200) Total. ...... ... . $304,920 $25,410 $27,225 $( 1.815) The annual budget was based on the following assumptions: 50.16 per kilometre for gasoline. b. 50.05 per kilometre for oil, minor repairs, and parts. C. 5480 per automobile per year for outside repairs. d. $900 per automobile per year for insurance. e. $8.610 per month for salaries and benefits. $2,400 per automobile per year for depreciation. The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance. WWW.TEX-CETERA.WS