Problem Solving Completing a Master Budget: The following data relate to the operations of Rebel Corporation, a wholesale distributor of consumer goods. Current assets as of December 31: Cash Accounts receivable Inventory Buildings and equipment Accounts payable Capital Stock Retained earnings 15,000 25,000 18,500 110.000 35.000 100,000 23,500 a. The gross margin is 40% of sales (so cost of goods sold is 60% of sales) b. Actual and budgeted sales data are as follows: Below table indicates sales for December month and sales for Jan, Feb and March months you have to take your own amounts. Months December January February March April Amounts (S) 50,000 60,000 72.000 86,400 103,680 c. Sales are 50% for cash and 50% on credit. Credit sales are collected in the month following sale. The accounts receivable at December 31 are the result of December credit sales d. Each month ending inventory should equal 30% of the following month's budgeted cost of goods sold. e. One-quarter of a month's inventory purchases is paid for in the month of purchase; the other three quarter is paid for in the following month. The accounts payable at December 31" are the result of December purchase of inventory. f. Monthly expenses are as follows: commission $10,000, rent $2,000, other expenses excluding depreciation 7% of sales. Assume all these expenses are paid monthly. Depreciation is $2,500 for the quarter and includes depreciation on new assets acquired during the quarter. 8. Equipment will be acquired for cash: $4,000 in January and $10,000 in February h. Management would like to maintain a minimum cash balance of 3,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of 2,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 2% per month, and for simplicity we will assume that interest is not compounded. The company would as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: Using the data above: 1. Complete the following Schedule: Schedule of expected cash collections January February March Cash sales Credit sales Total collections Quarter Quarter 2. Complete the following: Merchandise Purchases Budget January February March Quarter Budgeted cost of goods sold Add: desired ending inventory Total needs Less: beginning inventory Required purchases Quarter Schedule of expected cash disbursements- Merchandise Purchase January February March December purchases January purchases February purchases March purchases Total disbursements 3. Complete the following schedule: Schedule of expected cash disbursements - Selling and administrative expenses January February March Quarter Commissions Rent Other expenses Total disbursements 4. complete the following cash budget: Cash Budget January February March Quarter Cash balance, beginning Add: cash collections Total cash available Less: cash disbursements For inventory For Selling and administration For equipment Total cash disbursements Excess /deficiency of cash Financing: Borrowings Repayment Interest Total financing Cash balance T T