Required:

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

1. A sales budget by month and in total.

2. A schedule of expected cash collections from sales, by month and in total.

3. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

4. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

5. A cash budget. Show the budget by month and in total.

6. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

7. A budgeted balance sheet as of June 30.

You have just been hired to work for a company that sells whimsical coffee mugs, Spot's Spot, Inc. The company has exclusive franchise on the distribution of the coffee mugs, and sales have grown an rapidly over the last few years that it has become necessary to add management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious new members to the so The coffee mugs are sold to retailers for $20 each. Recent and forecasted sales in units are as follows: January (actual) $ February (acutal) $ March (acutal) $ April (budget) $ May (budget) June (budget) S July (Budget) August (budget) $ Sept (budget) S 23,200 29,200 43,200 68,200 103,200 53,200 33,200 31,200 28,200 The large buildup in sales is due to Mother's and Father's Day, your biggest holidays of the year paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit. 20% of a month's 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. Purchases are The company's monthly selling and administrative expenses are given below Variable Sales Comissions 4% of sales Fixed Advertising $ 360,000 34,000 138,000 15,000 4,600 30,000 Rent S Salaries $ Utilities Insurance $ Depreciation $ Insurance is paid on an annual basis, in November of every year. ***THINK PRE-PAID*** All selling and administrative expenses are depreciation and insurance expired. Equipment will be purchased during May for $24,000 cash, additional equipment will be purchased in June for $56,000 cash. The company declares dividends of $27,000 each quarter, payable in the first month of the following quarter. The company's balance paid during the month, in cash, with the exception of sheet at March 31 is given below: Assets Cash AR (58,400 Feb Sales; 691,200 March Sales Inventory Prepaid Insurance Property and equipment (net) 90,000 749,600 152,768 29,000 110,000 2,131,368 S S Total Assets Liabilities and Stockholders' Equity AP 116,000 27,000 1,120,000 868,368 2,131,368 Dividends Payable S Common Stock Retained Earnings Total liabilities and stockholders' equity The company has an agreement with a bank that allows it 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, 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 S1,000), while still retaining at least $66,000 in we will assume that interest is cash