solve for 2,3 and 4

Knockoffs Unlimited, a nationwide distributor of low-cost imitation designer necklaces, has an exclusive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has experienced a cash shortage. 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 eager to make a favourable impression on the president and have assembled the information below. The necklaces are sold to retailers for $10 each. Recent and forecast sales in units are as follows: January (actual) February (actual) March (actual) April May 29,000 June 44,000 July 57,000 August 83,000 September 117,000 68,000 48,000 46,000 43,000 The large buildup in sales before and during May is due to Mother's Day, Ending inventories should be equal to 40% of the next month's sales in units. The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected by month-end. 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. The company's monthly selling and administrative expenses are given below: Variable: Sales commissions Fixed: Advertising Rent Wages and salaries Utilities Insurance Depreciation 4% of sales $254,000 27,000 127,600 14,200 6,600 32,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $23,200 in new equipment during May and $58,000 in new equipment during June; both purchases will be paid in cash. The company declares dividends of $18,600 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below: $ 92,000 Assets Cash Accounts receivable ($44,000 February sales; $456,000 March sales) Inventory Prepaid insurance Fixed assets, net of depreciation Total assets Liabilities and Shareholders' Equity Accounts payable Dividends payable Common shares Retained earnings Total liabilities and shareholders' equity 500,000 132,800 46,200 1,040,000 $1,811,000 $ 134,800 18,600 980,000 677,600 $1,811,000 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. Required: 1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets: a. A sales budget by month and in total. Sales budget Budgeted sales in units Selling price per unit Total sales Answer is complete and correct. April May June 83,000 117,000 68,000 $ 10 10 $ 10 $ S 830,000 $1,170,000 $ 680,000 $ Quarter 268,000 10 2,680,000 2. A cash budget. Show the budget by month and in total. (Round your intermediate calculations and final answers to the nearest whole dollar. Also, round down your interest calculations to the next whole dollar amount. Cash deficiency, repayments and interest should be indicated by a minus sign. Do not leave any empty spaces; input a wherever it is required.) . Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June Quarter Cash balance, beginning $ 92,000 50,000 $ 50,000 $ 92,000 Add receipts from customers 609,000 872,000 1,038,000 2,519,000 Total cash available 701,000 922,000 1,088,000 2,611,000 Less disbursements: Purchase of inventory 328,000 388,000 314,800 1,030,800 Advertising 254,000 254,000 254,000 762,000 Rent 27,000 27,000 27,000 81,000 Salaries and wages 127,600 127,600 127,600 382,800 Sales commissions 33,200 46,800 27,200 107,200 Utilities 14,200 14,200 14,200 42,600 Dividends paid 18.600 18,600 Equipment purchases 23,200 58,000 81,200 Total disbursements 802,600 880,800 822,800 2,506,200 Excess (deficiency) of receipts over disbursements (101,600) 41,200 265,200 104,800 Financing Borrowings 153,131 10,436 163,567 Repayments 163,567 161,000 3 Interest 920 X 1,636 % 1,636 4.803 Total financing 154,051 12,072 165,203 329,370 Cash balance, ending $ 52.451 $ 53,272 $ 430,403 $ 434,170 OOOC OOOO OOOOO 3. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Income Statement For the Three Months Ended June 30 Sales revenue $ 2,680,000 Variable expenses: Cost of goods sold $ 1,072,000 Commissions 107,200 1,179,200 Contribution margin 1,500,800 Fixed expenses: Wages and salaries 382,800 Utilities 42,600 Insurance 19,800 Advertising 762,000 Rent 81,000 Depreciation 96,000 00 Operating income Less interest expense Net income 1,384,200 116,600 4,803 111.797 $ 4. A budgeted balance sheet as of June 30. Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Balance Sheet June 30 Assets Cash Accounts receivable Inventory Prepaid insurance $ 2,519,000 661,000 76,800 26,400 Fixed assets, net of depreciation 1,025,200 Total assets $ 4,308,400 Liabilities and Shareholders' Equity Accounts payable, purchases $ 120,000 Dividends payable 18,600 Common shares Retained earnings Total liabilities and shareholders' equity 980,000 770,860 $ 1,889,460