You have just been appointed to a new manager who believes you have outstanding budgeting skills. Since starting your job last summer, you've been showing management how you've used your latest spreadsheets and your newfound knowledge of Management Accounting to make sound business decisions. Your new manager is responsible for the nationwide distribution of designer shaving kit sets (SKS), and sales have skyrocketed thanks to multiple franchise agreements, and it's time to join his team and show off your skills. You have just been given full planning and budgeting responsibility for the entire SKS division. Your first task is to prepare a master budget for the next three months from April 1, 2019. You enthusiastically accept this responsibility and want to impress your highly respected new manager and president of the company. for you.

Note: The company requires a minimum cash balance of $10,000 each month. SKSs are available at retailers for $8 each and are flying off the shelves. The final estimated sales by unit are given below: January (actual)

January (actual)	20.000	June	60.000
February (actual)	24.000	July	40.000
March (actual)	28.000	August	36.000
Nisan	35.000	September	32.000
May	45.000

Increased sales volume before and during June is due to Father's Day, where SKS is a favourite. Closing stocks are expected to equal 90% of next month's unit sales. Each SKS costs $5.00.

Purchases are paid for as follows: 50% is paid in the month the purchase is made, and the remaining 50% is paid in the month following the purchase. All sales to distributors (for now) are made without discount, on credit and with payment within 15 days. The SKS division determined that only 25% of a month's sales were collected until the end of the month in which the sale took place. 50% is collected the month after the sale, and the remaining 25% is collected in the 2nd month after the sale. Bad debts were negligible and favorably support credit terms.

Below is a snapshot of the monthly selling and administrative expenses of the SKS division:

Variable:
Sales commissions	$1 per SKS
Fixed:
Wages and salaries	22.000 $
Vehicles	14.000 $
Insurance	$1,200
Depreciation	$1,500
Various	3.000 $

All selling and administrative expenses are paid in cash for the month, excluding depreciation (of course), and insurance is prepaid for the duration of the policy. SKS will purchase a plot of land for $22,500 in cash during the month of May. SKS contributes $12,000 in corporate dividends each quarter, payable in the first month of the next quarter. The balance sheet of SKS at the end of the first quarter is as follows:

assets
in advance	14.000 $
Accounts receivable ($48,000 February sale; $168,000 March sale)	216.000
Inventory (31,500 units)	157.500
prepaid insurance	14.000
fixed assets; net depreciation	172.700
Total assets	574.000 $
Obligations and equity of shareholders
Accounts payable	$85,700
Debt payable	12.000
Capital Stock	300.000
Retained earnings	176.850
Total Liabilities and Shareholder Equity	574.000 $

An agreement with Bank of the West allows SKS to borrow up to $150,000 in total loan amounts in increments of $1,000 at the start of each month. The interest rate on these loans is 10% per annum (quite high compared to market rates) but the interest is not compounded, so it's just simple interest. At the end of the quarter, SKS would pay the Bank of the West all retained interest on the loan and as much of the loan balance as possible (in $1,000 increments) while maintaining a minimum cash balance of $10,000.

Necessary:

Prepare a master budget for the quarter ending June 30, 2019. Include the following budget plans and financial statements:

1) Sales Budget by month and quarterly total

2) Schedule of expected cash collections from sales by month and total.

3) Goods purchase budget in units and dollars. Show budget by month and total.

4) Monthly and total expected cash payment schedule for goods purchases.

5) Cash Budget. Show the cash budget by month and in total.

6) Prepare a budgeted Income Statement for the quarter ending June 30, 2019. Use the contribution approach.

7) Prepare a budgeted Balance Sheet as of 30 June 2019.