The owners of Michaels Hardware Store as asked you to prepare a 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

ASSETS Cost ($) Depreeciation ($) Net book value ($)

Equipment 480,000 90,000 390,000

Current assets

Inventory 126,000

Accounts Reveivable 175,000

Cash 50,000 351,000

741,000

LIABILITIES $ SHAREHOLDERS EQUITY

Equity

Ordinary shares 235,000

Retained Earnings 138,000 373,000

Non-current Liabilities

Long-term note payable 200,000

Current liabilities

Accounts payable 156,000

short-term notes payable 12,000 368,000

741,000

The following details were also available:

1. actual units of sales for March were 10,000 units and each months sales are expected to exceed the prior months results by 5%. The selling price for each unit is $25.00
2. The policy of Rapid Hardware for ending inventory of a given month is to be equal to 80% of the next months expected sales. The March 31 inventory was 8,400 units based on this policy.
3. Sales representatives commissions are 12.5% and they are paid in the month of the sales. The managers salaries will be $3,500 in April and $4,000 for each month thereafter.
4. 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.
5. 30% of the sales are expected to be for cash. Receivables are collected in full in the month following the sale.
6. 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.
7. 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.
8. Dividends of $100,000 are to be declared and paid in May.
9. No cash payments for income taxes are to be made during the second quarter. Income taxes will be assessed at 35% in the quarter.
10. 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