You have just been hired as a new management trainee 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. 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 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings spid in the following month. Suppliers are paid $4.60 for a pair of earrings. One-half of a month's 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 month's 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: insurance is paid on an annual basis, in November of each yeat. The company plans to purchase $19,000 in new equipment during May and $46,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $19.500 each quarter, payable in the first month of the following quartet. The company's balance sheet as of March 31 is given below: The company plans to purchase $19,000 in new equipment during May and $46.000 in new equipment during dure, both puroleses will be for cash. The company declares dividends of $19,500 each quarter, paysble in the first month of the following quarter. The company's balance sheet as of March 31 is given below: 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 comparry has an agreement with a bank that allows the company to borrow in increments of 5 t.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 quartec, the company would poy the bank all of the accumulated interest on the loan and as much of the loan as possible in increments of $1,000 ), whille still retaining ot least $56,000incash. Aequired: Prepare a master budget for the three-month period ending June 30 . Include the following detalled schedules: 1. A. A soles budget, by month and in total. b. A schedvile of eppected cash collections, by month and in totat. 6. A merchandise purchases budget in units and in dotiars. Show the budget by month and in total. a. A weredide of expected cosh disbursements for merehandise purchases, by month and in totat 2. A cash budget. Show the budget by month and in total Determine any borrowing that would be needed to marrain me munmum cam baiance of 556.000 3. A budgeted income statement for the three-morth period ending june 30. Use the contritution aporoach. 4. A budpemest beiance sheer at of June 30 Comptete this auestian by entering yeur answers in the tabs below