Problem 3: Wild Wood Company's management asks you to prepare its master budget using the following information. The budget is to cover the months of April, May, and June of 2019. Assets Cash Accounts receivable Inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Wild Wood Company Balance sheet March 31, 2019 I Liabilities and Equity S 50,000 Accounts payable 175,000 Short-term notes payable 126, 000 Total current liabilities 351, 000 Long-term note payable 480,000 Total liabilities (90, 000) Common stock 390,000 Retained earnings Total stockholder's equity $741, 000 Total liabilities $156,000 12,000 168,000 200,000 368,000 235,000 138,000 373, 000 $741,000 Total assets Additional information a. Sales for March total 10,000 units. Each month's sales are expected to exceed the prior month's results by 5%. The product's selling price is $25 per unit b. Company policy calls for a given month's ending inventory to equal 80% of the next month's expected unit sales. The March 31 inventory is 8, 400 units, which complies with the policy. The purchase price is $15 per unit. c. Sales representatives' commissions are 12.5% of sales and are paid in the month of sales, The sales manager's monthly salary will be $3,500 in April and $4,000 per month thereafter. d. Monthly general and administrative expenses include $8,000 administrative salaries. SS, 000 depreciation, and 0.9% monthly interest on the long-term note payable. e. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale). f. All merchandise purchases are on credit, and no payables arise from any other transactions, one month's purchases are fully paid in the next month. g. The minimum ending cash balance for all months is S50, 000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. h. Dividends of S10,000 are to be declared and paid in May. Problem solving assignment Page 5 of 12 Required: Prepare the following budgets for 2019 1. Sales budget (in dollars) 2. Purchase budget 3. Budgeted cost of goods sold 4. Budgeted inventory for June 30, 2019 5. Selling expense budget 6. General and administrative expense budget 7. Expected cash receipts from customers 8. Expected cash payments to suppliers 9. Cash budget 10. Budgeted income statement 11. Budgeted statement of retained earnings 12. Budgeted balance sheet Problem solving assignment Page 6 of 12