Requirement 2: EARRINGS UNLIMITED Cash Budget For the Three Months Ending June 30 Cash balance, beginning Add receipts from customers Total cash available Less disbursements: Merchandise purchases Advertising Rent Salaries Commissions ( 4% of sales) Utilities Equipment purchases Dividends paid Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, ending Required: repare a master budget for the three-month period ending June 30 . Include the following detailed udgets: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections from sales, 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 $50,000. 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 . \begin{tabular}{l} Requirement 1a. Sales budget: \\ Budgeted sales in units \\ Selling price per unit \\ Total sales \\ Requirement 1b. Schedule of expected cash collections: \\ February sales \\ March sales \\ April sales \\ May sales \\ June sales \\ Total cash collections \\ Requirement 1c. Merchandise purchases budget: \\ Budgeted unit sales \\ Add desired ending inventory \\ Total needs \\ Less beginning inventory \\ Required purchases in units \\ Unit cost \\ Required dollar purchases \\ \hline Requirement 1d. Budgeted cash disbursements for merchandise purchases: \\ \hline Accounts payable \\ April purchases \\ May purchases \\ June purchases \\ Total cash disbursements \\ \hline \end{tabular} The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. A listing of the company's ledger accounts as of March 31 is given below: The company maintains a minimum cash balance of $50,000. 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 $50,000 in cash. Requiremeat 3: EARRINGS UNLIMITED Budgeted income Statement For the Three Months Ending June 30 Sales in units Sales Variable expenses: Cost of goods sold Commissions Contribution margin Fixed expenses: Advertising Rent Salaries Utilities Insurance Depreciation Net operating income Less interest expense Net income EARRINGS UNLIMITED Budgeted Balance Sheet June 30 Assets Cash Accounts receivable Inventory Prepaid insurance Property and equipment, net Total assets Liabilties and Equity Accounts payable, purchases Dividends payable Capital stock, no par Retained eamings Total liabilities and equily Accounts receivable at June 30 : May sales June sales Total Retained earnings at June 30: Balance, March 31 Add net income Total Less dividends declared Balance, June 30