Problem:

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$11 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)	20,200	June (budget)	50,200
February (actual)	26,200	July (budget)	30,200
March (actual)	40,200	August (budget)	28,200
April (budget)	65,200	September (budget)	25,200
May (budget)	100,200

The concentration of sales before and during May is due to Mothers 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 $4.10 for a pair of earrings. One-half of a months 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 months 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	$	210,000
Rent	$	19,000
Salaries	$	108,000
Utilities	$	7,500
Insurance	$	3,100
Depreciation	$	15,000

Insurance is paid on an annual basis, in November of each year.

The company plans to purchase $16,500 in new equipment during May and $41,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,750 each quarter, payable in the first month of the following quarter.

The companys balance sheet as of March 31 is given below:

Assets
Cash	$	75,000
Accounts receivable ($28,820 February sales; $353,760 March sales)		382,580
Inventory		106,928
Prepaid insurance		21,500
Property and equipment (net)		960,000
Total assets	$	1,546,008
Liabilities and Stockholders Equity
Accounts payable	$	101,000
Dividends payable		15,750
Common stock		820,000
Retained earnings		609,258
Total liabilities and stockholders equity	$	1,546,008

The company maintains a minimum cash balance of $51,000. 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 $51,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

b. A schedule 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.

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. Determine any borrowing that would be needed to maintain the minimum cash balance of $51,000.

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.

I have answered #1:

I need help with #2-#4 have the following completed and need help with the remainder of the blocks that are open without a 0:

Thank you! Please include the calculations to get the answer.

Sales Budget April May June Quarter 65,200 Budgeted unit sales 100,200 50,200 215,600 Selling price per unit 11 11 $ 11 11 $ $ 717,200 1,102,200 $ 552,200 2,371,600 Total sales Earrings Unlimited Schedule of Expected Cash Collections May April June Quarter February sales 28,820 0 28,820 309,540 353,760 March sales 44,220 0 143,440 |April sales 71,720 502,040 717,200 May sales 220,440 771,540 991,980 June sales 110,440 110,440 $ 481,800 $ 2,202,200 $ 766,700 953,700 Total cash collections Earrings Unlimited Merchandise Purchases Budget May April June Quarter 65,200 50,200 215,600 Budgeted unit sales 100,200 Add: Desired ending merchandise inventory 40,080 20,080 12,080 12,080 Total needs 105,280 120,280 62,280 227,680 Less: Beginning merchandise inventory 20,080 26,080 40,080 26,080 Required purchases 79,200 80,200 42,200 201,600 Unit cost $ 4.10 324,720 4.10 $ 4.10 $ 4.10 $ Required dollar purchases 328,820 173,020 826,560 $ Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May June Quarter Accounts payable 0 101,000 0$ 101,000 $ April purchases 162,360 162,360 0 324,720 May purchases 0 164,410 164,410 328,820 June purchases 86,510 0 0 86,510 Total cash payments 263,360 250,920 841,050 326,770 Prepare a master budget for the three-month perlod ending June 30 that includes 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 $51,000. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 May Quarter April June Beginning cash balance 75,000 $ 75,000 766,700 Add collections from customers 953,700 2,202,200 481,800 Total cash available 556,800 766,700 953,700 2,277,200 Less cash disbursements: Merchandise purchases 841,050 263,360 326,770 250,920 Advertising 210,000 210,000 210,000 630,000 Rent 19,000 19,000 19,000 57,000 Salaries 108,000 108,000 108,000 324,000 44,088 Commissions 28,688 22,088 94,864 Utilities 7,500 7,500 22,500 7,500 57,500 Equipment purchases 0 16,500 41,000 Dividends paid 15,750 0 0 15,750 Total cash disbursements 652,298 731,858 658,508 2,042,664 34,842 234,536 Excess (deficiency) of cash available over disbursements (95,498) 295,192 Financing: Borrowings 0 0 Repayments 0 10 Interest 0 0 Total financing C 0 0 0 295,192 234,536 34,842 $ Ending cash balance $ (95,498) $ Prepare a master budget for the three-month period ending June 30 that includes a budgeted income statement for the three- month perlod ending June 30. Use the contributlon approach Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Sales 2,371,600 Variable expenses: Cost of goods sold Commissions 0 0 Contribution margin 2,371,600 Fixed expenses: 630,000 Advertising Rent 57,000 324,000 Salaries Utilities 22,500 Insurance 9,300 Depreciation 45,000 0 0 1,087,800 Net operating income 1,283,800 Interest expense Net income 1,283,800 Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30. Earrings Unlimited Budgeted Balance Sheet June 30 Assets Cash Accounts receivable 551,980 Inventory Prepaid insurance Property and equipment, net $ 551,980 Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings 0 O Total liabilities and stockholders' equity $