The management of Zigby Manufacturing prepared the following balance sheet for March 31.

ZIGBY MANUFACTURING
Balance Sheet
March 31
Assets			Liabilities and Equity
Cash		$ 80,000	Liabilities
Accounts receivable		455,000	Accounts payable	$ 215,700
Raw materials inventory		93,400	Loan payable	32,000
Finished goods inventory		438,000	Long-term note payable	500,000	$ 747,700
Equipment	$ 640,000		Equity
Less: Accumulated depreciation	170,000	470,000	Common stock	355,000
			Retained earnings	433,700	788,700
Total assets		$ 1,536,400	Total liabilities and equity		$ 1,536,400

To prepare a master budget for April, May, and June, management gathers the following information.

1. Sales for March total 25,000 units. Budgeted sales in units follow: April, 25,000; May, 17,100; June, 22,300; and July, 25,000. The products selling price is $26.00 per unit and its total product cost is $21.90 per unit.
2. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given months ending materials inventory to equal 50% of the next months direct materials requirements. The March 31 raw materials inventory is 4,670 pounds. The budgeted June 30 ending raw materials inventory is 6,000 pounds. Each finished unit requires 0.50 pound of direct materials.
3. Company policy calls for a given months ending finished goods inventory to equal 80% of the next months budgeted unit sales. The March 31 finished goods inventory is 20,000 units.
4. Each finished unit requires 0.50 hour of direct labor at a rate of $16 per hour.
5. The predetermined variable overhead rate is $4.00 per direct labor hour. Depreciation of $40,787 per month is the only fixed factory overhead item.
6. Sales commissions of 10% of sales are paid in the month of the sales. The sales managers monthly salary is $5,000.
7. Monthly general and administrative expenses include $21,000 for administrative salaries and 0.9% monthly interest on the long-term note payable.
8. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale).
9. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase).
10. The minimum ending cash balance for all months is $80,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans.
11. Dividends of $30,000 are budgeted to be declared and paid in May.
12. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter.
13. Equipment purchases of $100,000 are budgeted for the last day of June.

Required: Prepare the following budgets for the months of April, May, and June: 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30.

ZIBGY MANUFACTURING Schedule of Cash Receipts April $ 650,000 June May 444,600 Sales $ $ 579,800 Cash receipts from Cash sales Collections of prior period sales Total cash receipts $ 0 $ 0 $ 0 Schedule of Cash Payments for Direct Materials April May June Materials purchases $ 199,700 $ 228,600 $ 242,300 Cash payments for Current period purchases Prior period purchases Total cash payments $ 0$ 0 $ 0 Cash Budget April May June Beginning cash balance Add: Cash receipts from sales Total cash available Less: Cash payments for: Direct labor Variable overhead General and administrative salaries Sales commissions Sales salaries Loan interest Dividends Purchases of equipment Long-term note interest Direct material 0 0 0 Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ O