QUESTION 1 Completing a Master Budget [L02] The following data relate to the operations of Lim Corporation, a wholesale distributor of consumer goods: a. The gross margin is 30% of sales. (In other words, cost of goods sold is 70% of sales.) b. Actual and budgeted sales data are as follows: c. Sales are 40% for cash and 60% 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's ending inventory should equal 20% 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-quarters is paid for in the following month. The accounts payable at December 31 are the result of December purchases of inventory. f. Monthly expenses are as follows: commissions, $12,000; rent, $1,800; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $2,400 for the quarter and includes depreciation on new assets acquired during the quarter. 4. Complete the following schedule: Schedule of Expected Cash Disbursements Selling and Administrative Expenses 5. Complete the following cash budget: 1. Complete the following schedule: 2. Complete the following: Merchandise Purchasing Budget * $70,000 sales X70%$49,000. ** $80,00070%20%$11,200. 3. Schedule of Expected Cash Disbursements - Merchandise Purchases January February March Quarter December purchases January purchases February purchases March purchases Total disbursements $32,550 * 12,600 $37,800 $45,150 $32,550 50,400 * Beginning balance of the accounts payable 4. Complete the following schedule: Schedule of Expected Cash Disbursements - Selling and Administrative Expenses Quarter Commissions Rent Other expenses Total disbursements January February March $12,000 1,800 5,600 $19,400