Thumbtack's March 31, 2012, budgeted balance sheet follows: THUMBTACK OFFICE SUPPLY Budgeted Balance Sheet March 31, 2012 Assets Liabilities Current assets: Current liabilities: Cash $18,000 Accounts payable $12,500 Accounts receivable 12,000 Salary and commissions payable 1,400 Inventory 16,000 Total liabilities $13,900 Prepaid insurance 2,200 Total current assets $48,200 Stockholder's Equity Plant assets: Common stock 16,000 Equipment and fixtures 45,000 Retained earnings 33,300 Less: Accumulated depreciation 30,000 Total stockholders' equity $49,300 Total plant assets $15,000 Total assets $63,200 Total liabilities and stockholders' equity $63,200 The budget committee of Thumbtack Office Supply has assembled the following data.

a. Sales in April were $40,000. You forecast that monthly sales will increase 2% over April's sales in May. June's sales will increase 4% over April's sales. July's sales will increase 20% over April's sales. Collections are 80% in the month of sales and 20% in the month following sale.

b. Thumbtack maintains inventory of $11,000 plus 2.5% of the COGS budgeted for the following month. COGS = 50% of sales revenue. Purchases are paid 30% in the month of purchase and 70% in the month following the purchase.

c. Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month. Salaries and commissions are paid 30% in the month incurred and 70% in the following month.

d. Other monthly expenses are as follows: Rent expense $2,400, paid as incurred Depreciation expense $200 Insurance expense $100, expiration of prepaid amount Income tax 20% of operating income, paid as incurred

1. Prepare a budgeted balance sheet as of May 31, 2012.

2. Prepare the budgeted statement of cash flows for the two months ended May 31, 2012. (Note: You should omit sections of the cash flows statements where the company has no activity.)