Please help solve question 1, Requirement 3. Will rate thumps up IF answer is CORRECT.

1 25 points 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 $10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (In pairs of earrings): int January (actual) February (actual) March (actual April (hudget) May (budget) Bence 20,000 June (budget) 24,000 Duly (budget 40.90 August (budget) 65,000 September (budget) 100.000 50,000 30,000 25,000 25,000 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 months to supply 40% of the eanings sold in the following month Suppilers are paid $4 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% 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: Var af sale Fixed Advertising 1.200.000 1 Monthly operating expenses for the company are given below. 4% of sales 25 Dolets Variable: Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $ 200,000 $ 18,000 $ 106,000 7.000 $3,000 $14.000 Pit References Insurance is paid on an annual basis, in November of each year The company plans to purchase $16.000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: 5 14,000 Asset Casti Accounts receivable (126,000 Flivary sales 5320,000 March ales) Inventory Prepaid insurance Property and went (net) Total assets Liberties and stockholders' wity Accounts payable Dividendo mayable Con stock Retained earning 3:40,000 10,000 21,000 950,000 $ 1,495, 100.000 35,000 500.000 S80,000 1 The company's balance sheet as of March 31 is given below. 5 74,000 Assets Cash Accounts receivable (526,000 February sales, $320,000 March sales) Inventory Prepaid insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Comon stock Retained earnings Total liabilities and stockholders' equity 346,000 104,000 21.000 950,000 $ 1,495,000 BOOK Al ce 100,000 15,000 000,000 Sie $ 1,495,000 The company maintains a minimum cash balance of $50.000. 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 16 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 550,000 in cash Required: Prepare a master budget for the three month period ending June 30. Include the following detailed schedules: 10. A sales budget by month and in total b. Aschedule 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 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 $50,000. 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. Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 10 Required 10 Required 2 Required 3 Required 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 Variable expenses 0 0 Fixed expenses 0 0 0