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-$15 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) February (actual) March (actual) April (budget) 21,600 Dune (budget) 27,000 July (budget) 41,000 (budget) 66,000 September (budget) 101,600 51,000 31.00 29,000 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 mon to supply 40% of the earrings sold in the following month Sunteti ate pala S4 90 tot 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 moeith following sale Bad debts have been negligible Monthly operating expenses for the company are given below: 4x of sales Variable: Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation 5290,000 $ 27,000 $ 124,000 5 11.500 1,900 $ 23,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $20,500 in new equipment during May and $49,000 in new equipment during June, both purchases will be for cash. The company declares dividends of $21750 each quarter, payable in the first month of the following quarter. The company's balance sheet as on March 31 is given below 33,00 Assets Cash Accounts receivable ($41,700 February sales; 5501,600 March sales) Inventory Prepaid insurance Property and equipment (not) Total assets Llabilities and Stockholders' Equity Accounts payable Dividends payable Connon stock Retained earnings Total liabilities and stockholders' equity 543,300 130,928 25,500 1.040,000 $ 1,822,728 $ 109,000 21,75e 980, eee 711,978 5 1,822,720 The company maintains a minimum cash balance of $59,000. 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 $59.000 In cash Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules 18. 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 budget Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of 559.000 3. A budgeted income statement for the three-month period ending June 30. Use the contribution aporoach 4. A budgeted balance sheet as of June 30, Complete this question by entering your answers in the tabs below. Req 1A Reg 18 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 sales budget by month and in to Sales Budget April May June Quarter Budgeted unit sales Selling price per unit Total sales Req 18 > Complete this question by enterin your answers in the tabs below. Reg 1A Reg 1B -Regio Reg 10 Reg 2 Req3 Roga Prepare a master but for the three month period ending June 30 that includes a schedule of expected cash collection by month and in total Es Und Schedule of Elected Cash Collections May June Quarter 0 February sales Marches g 0 usay sales Junees Total cash colections 05 (Reg 1A Req1c> Complete this question bytering your answers in the tabs below Reg 1 Reg 13 Haq 1C Req ID Reg 2 R3 Rog Prepare a master budget for the three month period ending June 30 that includes a marchandise 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 May Quarter Buogelea 94 0 To needs 0 0 0 OS Required purchases (Reg 18 Reg 10 > Complete this question by entering your answers in the tabs below. Reg LA Req 18 Reg 10 Req 10 Req 2 Req3 Req4 Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash disbursements For merchandise purchases, by month and in total. Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May June Quarter Accounts payable 0 Aon purchases 0 May purchases 0 June purchases 0 Total cash payments $ 015 0 Prepare 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 559.000. Cash deficiency, repayments and interest Whould be indicated by a minus sign.) hindinge 30 Apr May un 0 0 0 0 0 0 0 0 Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent Salaries Commissions Utilities Equipment purchases Dividends paid Totalcash disbursements Excess (deficlency of cash viable over disbursements Financing Borrowings Repayments Interest Total trancing Ending cashbance 0 0 0 0 0 0 0 0 o 0 0 5 $ 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. banded June 30 Variable expenses 0 0 Fidexpenses 0 0 0 R3 Req LA Reg 18 Reac Reg 10 Rogz Roth Prepare a master budget for the three month penad ending June 30 that includes a budgeted balance sheet of duos do Assets Total assets $ Liabilities and Stockholders Equity 5 Tota labai and ockholders equity