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 sets many styles of earrings, but all are sold for the same price-519 per poi Actual sales of earrings for the last three months and budgeted sales for the next six months follow in pairs of earrings) January (actual) February (actual) March (actual) April (budget) May (budget) 23,000 29,90 43,00 68. 103,000 June (budget) July (budget) August (budget) September (budget) 53,000 33,00 31,000 28. 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 $5.50 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 Sales commissions of sales Advertising $350.00 $ 33.000 Monthly operating expenses for the company are given below. Variables Sales c on Advertising $350,000 $ 33, $ 136,000 $ 14, Salaries Depreciation . Insurance is paid on an annual basis, in November of each year The company plans to purchase $23,500 in new equipment during May and $55,000 in new equipment during June: both purchases will be for cash. The company declares dividends of $26,250 each quarter, payable in the first month of the following quarter The company's balance sheet as of March 31 is given below Assets Accounts receivable (555,100 February sales; $653,000 March sales) Inventory Prepaid Insurance Property and coulpment (net) 703.700 149.500 25.500 Liabilities and Stockholders' Equity Dividends payable Common stock Retained earnings 25,250 1.100.000 314.5 Retained earnings Total liabilities and stockholders equity $ 2.075, The company maintains a minimum cash balance of $65,000. All borrowing is done at the beginning of a month any repayments are made at the end of a month 3 as 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 loon as possible in increments of $1,000), while still retaining at least $65,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules NEW UASEPULCI SONG 2.0 Red LA e Re Re 1D Prepare a master budget for the three-month period ending June 30 that includes a cash budget show the budget by month and in tetal Determine any borrowing that would be needed to maintain the minimum cash balance of $65.000. (Cach deficiency, repayments and interest should be indicated by a minus sign.) Earrings United Cash Budget For the Three Months En June 20 Apel May June Quarte 0 0 0 IIIIII Totalca sements Ees de och CASE I PROJECT SPRING 2020 Reg 1A Reg 1B Reg 1C Reg 1D Reg2 Req3 Reg so that includes a budgeted income statement for the Prepare a master budget for the three month period and month period ending Lune 30. Use the contribution approach E limited Budgetede State Res2 NEWCASE / PROJECT SPRING 2020 Req1A 10 CRD Read Prepare a master budget for the three- month period ending line 30 that includes a budgeted balance sheet as of June 30. 8.30 Earrings Unlimited oted Balance Sheet B es and Stockholders' Equity