You are a team of consultants who assist organizations with budgeting, and you provide data analysis to assist with decision making. You have just been hired as a consultant by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. The organization is also interested in changing the commission structure to see if they can boost profits. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price$$16\mathrm{.}00$ per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow $($in pairs of earrings$)$:January $($actual$)25,600$June $($budget$)42,600$February $($actual$)26,600$July $($budget$)24,600$March $($actual$)45,600$August $($budget$)20,600$April $($budget$)61,600$September $($budget$)23,600$May $($budget$)100,600$ The concentration of sales before and during May is due to Mothers Day. Sufficient inventory should be on hand at the end of each month to supply $40\%$ of the earrings sold in the following month. Suppliers are paid $$6\mathrm{.}00$ for a pair of earrings. One$-$half of a months purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only $20\%$ of a months sales are collected in the month of sale. An additional $70\%$ is collected in the following month, and the remaining $10\%$ is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable: Sales commissions $4\%$ of salesFixed: Advertising$$230,000$ Rent$$21,000$ Salaries$$112,000$ Utilities$$8,500$ Insurance$$3,300$ Depreciation$$17,000$ Insurance is paid on an annual basis, in November of each year. The company plans to purchase $$16,000$ in new equipment during May and $$66,000$ in new equipment during June; both purchases will be for cash and the new purchases are not depreciated this quarter, but all other depreciation remains because nothing was sold. The company declares dividends of $$26,000$ each quarter, payable in the first month of the following quarter.The companys balance sheet as of March $31$ is given below: ASSETSCash$$76,000$AAccounts receivable $($$$42,560$ February sales plus $$583,680$ March sales$)626,240$Inventory $147,840$Prepaid insurance $29,000$Property and equipment $($book value net of Acc. Depr$))1,110,000$Total assets$$1,989,080$LIABILITES AND STOCKHOLDERS EQUITYAccounts payable$$156,000$Dividends payable $26,000$Common stock $1,150,000$Retained earnings $657,080$Total liabilities and stockholders equity$$1,989,080$ The company maintains a minimum cash balance of $$56,000.$ All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $$1,000$ at the beginning of each month. The interest rate on these loans is $1\%$ per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible $($in increments of $$1,000),$ while still retaining at least $$56,000$ in cash. Prepare a master budget for the three$-$month period ending June $30.$ Include the following detailed schedules: $2.$ A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $$56,000\mathrm{.}3.$ A budgeted income statement for the three$-$month period ending June $30.$ Use the contribution approachPlease include how calculations were made on the budget sheet ex$.$ January$($actual$)*$ $$16$ per pair

You are a team of consultants who assist organizations with budgeting, and you provide data analysis to assist with decision making. You have just been hired as a consultant by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. The organization is also interested in changing the commission structure to see if they can boost profits. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price$-$ $$16\mathrm{.}00$ per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow $($in pairs of earrings$)$:

$\backslash$table$[[$January $($actual$),2$