Royal Catering Company is preparing budgets for the second quarter ending June 30.

Budgeted sales of the companys only product for the next four months are:

April...............................................................................	70,000 units
May................................................................................	85,000 units
June...............................................................................	90,000 units
July................................................................................	50,000 units
March Actual..................................................................	60,000 units

The selling price is $1 per unit.

The gross profit rate is 40% of sales, cost of good sold is therefore 60% of sales.

The company collects 20% of sales in the month of the sale; 80% are collected in the month following sale.

The accounts receivable balance on March 31 was $48,000.

The company desires to have inventory on hand at the end of each month equal to 30% of the following months cost of good sold.

Salaries and wages are $7500 per month, shipping 6% of sales, advertising $6000 a month. Other expenses are 4% of sales. Depreciation expense is $6000 for the quarter.

Purchases for equipment are $11500 in April and $3000 in May.

The company has the policy to pay 50% of its inventory during the month of purchase and 50% the following month.

The company has decided to pay $3500 in dividends in June.

Half of a months purchases are paid for in the month of purchase; the other half is paid for in the following month.

No discounts are given for early payment.

The accounts payable balance on March 31 was $18,300.

Net building and equipment in March 31^st was $214 100.

Capital stock on March 31^st was $190 000.

Retained earning on March 31^st was $75 400.

The inventory balance on March 31^st was $12 600.

Royal Catering Company desires a cash balance of at least $8,000 at the end of each month. The cash balance in March 31^st was $9,000.

A line of credit is available at a local bank that allows the company to borrow up to $15,000.

a. All borrowing occurs at the beginning of the month and must be in multiples of $1000. All repayment is made at the end of the month and must be in multiples of $1000

b. Any interest is paid only at the time of payment of principal. The interest rate is 12% per year.

Royal Catering Company desires a cash balance of at least $8,000 at the end of each month. The cash balance on March 31st was $9,000.

Question:

1. Prepare a schedule of expected cash collections.

2. Prepare an inventory purchase budget.

3. Prepare a schedule of expected cash disbursements for purchases

4. A schedule of expected cash disbursements for operating expenses.

5. A Cash budget.

6. A Budgeted income statement for the quarter ending June 30th.

7. A Budgeted balance sheet