Required: Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format. That is, each budget should be properly labeled and should start and end on one page without having page breaks in the middle. There can be more than one budget or a budget schedule on the same page (For example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as they completely fit on that same page.

1. Prepare a sales budget for January through March and for the Quarter in total. The selling price per unit is $45.00. December of the previous year 30,000 January 100,000 February 10,000 March 40,000 April 40,000

2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through March and for the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value the quality and on-time delivery of the product. Also, assume that currently, it is company policy that ending inventory should equal 50% of next month's projected sales.

3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $80,000.00, and this was the ending cash balance in the cash account on December 31. Additional Data: Past experience shows that 40% of sales are collected in the month of the sale, and 60% in the month following the sale. Selling cost is $12 per unit sold. Other expenses include $35,000 per month for rent, $104,000 for advertising, and $76,000 per month for depreciation. All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases of inventory are paid in February). The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when a borrowing need is identified and repayments are made at the end of a month when the company has excess cash(i.e. this company does not take out additional loans to pay current loans.) Also, interest associated with a loan is only paid at the time when that loan is paid (i.e. a loan is only paid if there is enough cash to pay off the whole loan, any interest associated with it, and the company still has enough cash left over to meet its requirement for the minimum cash balance.)

4. Prepare the Budgeted Income Statement based on all of the information given above. Label the budgets prepared in Steps 1-4 as budget scenario A.

5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory assumptions: Ending Inventory B. 90% C. 10% 6.provide brief analysis of the three inventory policies depicted in the budget scenarios A, B, and C and recommend a policy that the company should implement. Give reasons for your recommendation. should be based on the results you obtained from the analyses in steps 1-5 above for each of the scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the President of the company about the company's inventory policies.