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-$14 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) 21,600 June (budget) 51,600 February (actual) 27,600 July (budget) 31,600 March (actual) 41,600 August (budget) 29,600 April (budget) 66,600 September (budget) 26,600 May (budget) 101,600 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 $4.80 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 sole Bad debts have been negligible Monthly operating expenses for the company are given below: Variable: Sales commissions 4 of sales Advertising 5 280,000 Rent $ 26,000 Utilities Insurance $ 3,800 Depreciation $ 22,000 Insurance is paid on an annual basis, in November of each year, Fixed: Salaries $ 122.000 $ 11,000 The company plans to purchase $20,000 in new equioment durina Mav and $48.000 in new equioment during June: both purchases The company plans to purchase $20,000 in new equipment during May and $48,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $21,000 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 $ 82,600 Accounts receivable (538,640 February sales: $465,920 March sales) 504,560 Inventory 127,872 Prepaid insurance 25,000 Property and equipment (net) 1.030,000 Total assets 5.1,769,432 Liabilities and Stockholders' Equity Accounts payable $ 108,080 Dividends payable 21,000 Common stock 960,000 Retained earnings 680,432 Total abilities and stockholders' equity $ 1,769,432 The company maintains a minimum cash balance of $58,000. All borrowing is done at the beginning of a month any repayments are mode 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 loons 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 foon as possible on Increments of $1,000). While still retaining at least $58,000 in cash, Required: Prepare a master budget for the three-month period ending June 30. Include the following detalled schedules: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. CA 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 cash balance of $58,000, 3. A budgeted Income statement for the three-month period ending June 30. Use the contribution approach Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 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 mir cash balance of $58,000. 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. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 10 Reg 1D Reg 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a sales budget, by month and in total. Sales Budget April May June Quarter Budgeted unit sales Selling price per unit Total sales Reg 1B > Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 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 minimu cash balance of $58,000. 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. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg 1C Req ID Reg 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash collections, by month and in total. Earrings Unlimited Schedule of Expected Canh Collection April May June Quarter February sales $ March sales April sales May salos 0 June salos 0 Total cash collections 0 $ 0 $ $ 0 0 0 $ 0 0 Prepare a maste! 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 th cash balance of $58,000. 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. Complete this question by entering your answers in the tabs below. Reg 4 Reg 1A Reg 18 Req 1C Reg 2 Reg 3 Reg 1D May Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget April June Quarter Budgeted unit sales 0 Add: Desired ending merchandise inventory Total needs 0 0 0 0 Less: Beginning merchandise inventory Required purchases 0 0 0 0 Unit cost Required dollar purchases $ 0 $ $ 0 $ 0 0 Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules: 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 maintai cash balance of $58,000. 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. Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Reg 10 Req 1D Reg 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash disbursemer for merchandise purchases, by month and in total Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May Juno Quarter Accounts payable $ 0 April purchases 0 May purchases June purchases 0 Total cash payments $ 0 $ $ 0 0 0 Reg 4 0 0 Reg 18 Req 1A Req 1C Reg 1D Reg 2 Reg 3 Prepare a master budget for the three-month period ending June 30 that includes 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 $58,000. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending Juno 30 April May June Quarter Beginning cash balance Add collections from customers Total cash available 0 0 Less cash disbursements: Merchandise purchases 0 Advertising 0 Rent 0 Salaries Commissions Utilities Equipment purchases 0 0 Dividends paid 0 0 0 Total cash disbursements 0 0 0 Excess (deficiency) of cash available over disbursements 0 0 0 Financing: Borrowings 0 Repayments 0 0 (5.300) (5.300) Interest 0 0 (180,000) Total financing (180,000) 0 0 (185,300) Ending cash balance (185,300) $ 0 $ o $ (185,300) $ (185,300) 0 0 0 0 0 Reg 1A Reg 1B Reg 1C Req ID Reg 2 Reg 3 Reg 4 Prepare a master budget for the three-month period ending June 30 that includes a budgeted income statement for the three- month period ending June 30. Use the contribution approach. Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Sales Variable expenses Cost of goods sold Commissions 0 0 Contribution margin Fixed expenses Advertising Rent Salarios Utilities Insurance Depreciation 0 Net operating income 0 Net Income 0 Reg 1A Reg 13 Reg 1C Reg 1D Reg 2 Reg 3 Reg 4 Prepare a master budget for the three- month period ending June 30 that includes a budgeted balance sheet as of June 30. Earrings Unlimited Budgeted Balance Sheet June 30 Assets Cash Accounts receivable Inventory Prepaid insurance Property and equipment.net 0 Total assets $ Llabilities and Stockholders' Equity Accounts payable Olvidends payable Common stock Retained earnings Total liabilities and stockholders' equity $ 0 Req3