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 nts below. The company sells many styles of earrings, but all are sold for the same price-$18 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): eBook January (actual) 23, 800 June (budget) 53, 800 February (actual) 29, 800 July (budget) 33, 800 March (actual) 43, 800 August (budget) 31, 800 Print April (budget) 68, 800 September (budget) 28, 800 May (budget) 103, 800 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 References month to supply 40% of the earrings sold in the following month Suppliers are paid $5.90 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: Variable: es commissions 4% of sales Fixed: Advertising $ 390, 000 Rent $ 37, 000 Salaries 144, 000 Utilities $ 16, 500 Insurance $ 4,900 Depreciation 33, 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $25,500 in new equipment during May and $59,000 in new equipment during June; both purchases Graw Hill Q Search or enter website name 41)) @ - . N W W E R Y U O P A S D F G H J K Z X C B N M option command command optionCheck my work 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 sold in the following month. Suppliers are paid $5.90 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: Book Variable: Sales commissions 4% of sales Fixed: Prin Advertising $ 390, 000 Rent $ 37,000 Salaries $ 144, 000 Utilities $ 16, 500 References Insurance $ 4, 90 Depreciation $ 33, 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $25,500 in new equipment during May and $59,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $29,250 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: Assets Cash $ 93, 000 Accounts receivable ($53, 640 February sales; $630, 720 March sales) 684, 360 Inventory 162, 368 Prepaid insurance 30 , 500 Property and equipment (net) 1, 140, 000 Total assets $ 2, 110, 228 Liabilities and Stockholders' Equity Accounts payable $ 119, 000 Dividends payable 29, 250 Common stock 1, 180, 000 Retained earnings 781, 978 Prev 1 of 1 Next > Q Search or enter website name $5 & C Ne W# A 5 7 O delet W E R Y U O P 4 S D F G H J K Z X C V B N ption command mmand optiorCheck my work Depreciation $ 33, 000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $25,500 in new equipment during May and $59,000 in new equipment during June; both purchases 100 will be for cash. The company declares dividends of $29,250 each quarter, payable in the first month of the following quarter. points The company's balance sheet as of March 31 is given below: Assets Cash $ 93, 000 Boo Accounts receivable ($53, 640 February sales; $630, 720 March sales) 684, 360 Inventory 162, 368 Prepaid insurance 30, 500 Print Property and equipment (net) 1, 140, 000 Total assets $ 2, 110, 228 Liabilities and Stockholders' Equity References Accounts payable $ 119, 000 Dividends payable 29, 250 Common stock 1, 180, 000 Retained earnings 781, 978 Total liabilities and stockholders' equity $ 2, 110, 228 The company maintains a minimum cash balance of $69,000. 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 $69,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: . a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. A rach hildnet Show the hudnet hy month and in total Determine any harrowing that would he needed to maintain the minimum Graw Prev 1 of 1 Next > esc Q Search or enter website name O W # A O W E Y U O P 4 S D F G H J K . . Z X C V B IN option command mmand optionezto.mheducation.com Saved Help Save & Exit Submit Case 2, Part 1 i Check my work 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum 100 points cash balance of $69,000. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. eBook Complete this question by entering your answers in the tabs below. Print Reg 1A Req 1B Req 1C Req 1D Req 2 Req 3 Req 4 Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units References and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget April May June Quarter Budgeted unit sales Total needs O o Required purchases Unit cost Required dollar purchases o $ o $ esc Search or enter website name W# A GA & 5 6 del W E R Y O P 4 S D G H K C V B N M opti command option" ezto.mheducation.com Help Save & Exit Submit Case 2, Part 1 i Saved Check my work . a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum 100 points cash balance of $69,000. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. Book Complete this question by entering your answers in the tabs below. Print Req 1A Req 1B Reg 10 Rea 10 Req 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units References and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget April May June Quarter Budgeted unit sales Total needs o Required purchases Unit cost Required dollar purchases o $ o Req 1B Req 1D > Mc esc Search or enter website name O A O 9 O Q W R Y O P A S ck D G H J K . . X C V B N M com command optionC ezto.mheducation.com D . esc Search or enter website name esc Search or enter website name @ N 6 8 O tab Q W R T Y U O P lock A S D F G H J K . . V B N M trol opt an command optionezto.mheducation.com C D . Saved Help Save & Exit Case 2, Part 1 i Su Check my wor a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum 100 points cash balance of $69,000. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. eBook Complete this question by entering your answers in the tabs below. Print Req 1 Req 1B Req 1C Req 10 Reg Req 3 Req 4 Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30. References Earrings Unlimited Budgeted Balance Sheet June 30 Assets otal assets Liabilities and Stockholders' Equity Graw esc Q Search or enter website name