You have just been hired as a new management trainee by Jewelry All Day. Since you are well-trained in budgeting, you have decided to make 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.

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):

January (actual)	23800
June (budget)	53800
February (actual)	29800
July (budget)	33800
March (actual)	43800
August (budget)	31800
April (budget)	68800
September (budget)	28800
May (budget)	103800

The concentration of sales before and during May is due to Mothers 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 months purchases are 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 months 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 the sale. Bad debts have been negligible.

Monthly operating expenses for the company are given below:

Variable:
Sales 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 will be for cash. The company declares dividends of $29,250 each quarter, payable in the first month of the following quarter.

The companys balance sheet as of March 31 is given below:

Assets
Cash	93000
Accounts receivable ($53,640 February sales; $630,720 March sales)	684360
Inventory	162368
Prepaid insurance	30500
Property and equipment (net)	1140000
Total assets	2110228
Liabilities and Stockholders Equity
Accounts payable	119000
Dividends payable	29250
Common stock	1180000
Retained earnings	781978
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.

Make your 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.