Wild Wood Company's management asks you to prepare its master budget using the following information. The budget is to cover the months of April, May, and June of 2011. Wild Wood Company Balance Sheet March 31, 2011 Assets Liabilities and Equity Cash 50,000 Accounts payable Accounts receivable 175,000 Short-term notes payable Inventory 126,000 Total current liabilities Total current assets 351,000 Long-term note payable Equipment, gross 480,000 Total liabilities Accumulated depreciation (90,000) Common stock Equipment, net 390,000 Retained earnings Total stockholders' equity Total assets 741,000 Total liabilities and equity Additional Information: 1) Sales for March total 10,000 units. Each month's sales are expected to exceed the prior month's results by 5%. The product's selling price is $25 per unit. 2) Company policy calls for a given month's ending inventory to equal 80% of the next month's expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit. 3) Sales representatives' commissions are 12.5% of sales and are paid in the month of the sales. The sales manager's monthly salary will be $3,500 in April and $4,000 per month thereafter. 4) Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable. 5) The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale). 6) All merchandise purchases are on credit, and no payables arise from any other transactions. One month's purchases are fully paid in the next month. 7) The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance. 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 calendar quarter. Income taxes will be assessed at 35% in the quarter 10) Equipment purchases of $55,000 are scheduled for June. REQUIRED 1) Prepare sales budget, including budgeted sales for July 2) Prepare purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the June 30 budgeted inventory 3) Prepare the operating expense budget 4) Prepare the budgeted Income Statement 5) Prepare expected cash receipts from customers and the expected June 30 balance of accounts receivable 6) Prepare expected cash payments for purchases and the expected June 30 balance of accounts payable 7) Prepare budgeted cash payments for operating expenses 8) Prepare the cash budget 9) Prepare the budgeted Balance Sheet 10) Prepare the budgeted Statement of Cash Flows

Sales Budget April May June July April May June Quarter Inventory, Purchases and Cost of Goods Sold Budget April May June Quarter Prior period's unit sales Plus 5% growth Projected unit sales Projected unit sales Selling price per unit Projected Sales * remember to multiply the number of units by the unit cost to get the cost of purchases and cost of goods sold Operating Expenses Budget April May June Quarter Budgeted Income Statement Wild Wood Company Budgeted Income Statement For the Quarter ended June 30, 2011 Budgeted Cash Collections from Customers April May June Quarter April May June Quarter April May June Quarter April May June Quarter Budgeted Cash Payments for Purchases Budgeted Cash Payments for Operating Expenses Cash Budget Budgeted Balance Sheet Wild Wood Company Budgeted Balance Sheet For the Quarter ended June 30, 2011 Budgeted Statement of Cash Flows Wild Wood Company Budgeted Statement of Cash Flows For the Quarter ended June 30, 2011