Related to budgeting

Mahendra Toys is a wholesale distributor of gifts and accessories. The following data relates to their balance sheet as of 31 December 2019. Current Assets Cash 5 3,000 Accounts Receivable $ 42,000 Inventory 5 10,200 Building and equipment, Net' $136,000 Total Assets $196,200 Current Liabilities Accounts Payable Common Shares Retained Earnings Total Ijabilities&0wner's Equity a. The gross margin for the company is 40% of sales. b. Actual and budgeted sales data are as follows December (Actual) $80,000 $51000 $91000 $66000 April $70,000 c. Sales are 30% in cash and 70% in credit. Credit sales are collected in the month following the sale. d. Each month's ending inventory should be 25% of the following month's budgeted cost of goods sold. e. 30% of the month's inventory purchases are paid for in the month of purchase; the remaining 70% is paid for in the following month. f. Monthly expenses are as follows: salaries, $10,000; rent, $6,000; advertisements, $2,000; other expenses (excluding depreciation), 12% of sales. Depreciation is $3,200 for the quarter and includes depreciation on new assets acquired during the quarter. Equipment will be acquired for cash: $4,000 in January and $6,000 in March. Management would like to maintain a minimum cash balance of $6,000 at the end of each month. Assume the company can borrow at 0% interest and they do not pay any income tax. All borrowing occurs at the beginning of a month. The company will, as far as it is able, repay outstanding loans at the end of each month Fran Question 1: Prepare the following budgets for each of the first three months of 2020. [20 Marks] - Schedule of Expected Cash Collection - Merchandise Purchase Budget - Schedule of Cash Disbursement for Purchase - Schedule of Cash Disbursement for S 8: A expenses - Cash Budget Question 2: Prepare a budgeted income statement for the first three months of 2020 and a budgeted balance sheet as of March 31, 2020 [10 Marks]