The management of Rapid Hardware has asked you to prepare master budget for the months of April, May and June 2014 for the entity using the following information.

Statement of Financial Position as at 31 March 2014

ASSETSCost ($)Depreeciation ($)Net book value ($)

Equipment480,00090,000 390,000

Current assets

Inventory126,000

Accounts Reveivable175,000

Cash50,000 351,000

741,000

LIABILITIES $ SHAREHOLDERS' EQUITY

Equity

Ordinary shares235,000

Retained Earnings138,000373,000

Non-current Liabilities

Long-term note payable200,000

Current liabilities

Accounts payable156,000

short-term notes payable12,000368,000

741,000

The following details were also available:

a.actual units of sales for March were 10,000 units and each month's sales are expected to exceed the prior month's results by 5%. The selling price for each unit is $25.00

b.The policy of Rapid Hardware for ending inventory of a given month is to be equal to 80% of the next month's expected sales. The March 31 inventory was 8,400 units based on this policy.

c.Sales representatives' commissions are 12.5% and they are paid in the month of the sales. The manager's salaries will be $3,500 in April and $4,000 for each month thereafter.

d.The general and administrative expenses include administrative salaries of $8,000 per month, depreciation of $5,000 per month and 0.9% monthly interest on the long term note payable.

e.30% of the sales are expected to be for cash. Receivables are collected in full in the month following the sale.

f.All purchases are on credit and no payable arise from any other transactions. Purchases are paid for in the next month. The purchase price is $15 per unit.

g.The minimum ending cash balance for all the months is $50,000 and if necessary, the company will borrow enough cash to reach this target. The short-term notes will require an interest payment of 1% at the end of each month. If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable.

h.Dividends of $100,000 are to be declared and paid in May.

i.No cash payments for income taxes are to be made during the second quarter. Income taxes will be assessed at 35% in the quarter.

j.Equipment purchases of $55,000 are to be scheduled for June.

You are required to prepare the following budgets and other financial information in order to assist you to complete the master budget:

1.Sales budget, including that for July

2.The purchases budget to include the budgeted cost of goods sold for each month and the quarter as well as the cost of the June 30 budgeted inventory

3.The selling expense budget

4.The general and administrative expense budget

5.The budget for expected cash receipts from customers and the expected June 30 accounts receivable balance

6.The budget for expected cash payments for purchases and the expected June 30 balance for accounts payable

7.The cash budget for the quarter

8.the budgeted retained earnings statement