You have just been hired as a new management trainee by Earrings Unimited, a distributor of earrings to various retail outiets located in shopping malls across the country in the past, the company has done very litue in the way of budgeting and at certain times of the year has expenenced 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 seils many styles of earrings, but all are sold for the same price- $11 per pair Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings) 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 earnings sold in the following month. Suppliers are paid 5410 for a pair of earings. 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 70s is collected in the following month, and the remaining 10 s is collected in the second month following sale Bad debts have been negligible. Monthly operating expenses for the company are given below Insurance is paid on an annual basis, in November of each year The company plans to purchase 516,500 in new equipment during May and 541,000 in new equipment during June, both purchases will be for cash. The company dectares dividends of $15,750 each quarter, payable in the first month of the following quarter The company's balance sheet as of Marchat is given betow? The company maintains a minimum cash balance of 551000 . All borrowing is done at the beginnung of in monthy any repayments are made at the end of a month The corrpary has an agreement with a bark that allows the compary to bortow in increments of st.000 at the beginning of each month the interest rate anthese loons is the per month and for Linplicity we wil assurne that interestis not campounded. At the end of the quartec, the company would poy the bank all of the occumulated interest on the loan and as much of the ioan as possibie in increments of 51,000 , whie stall relaring at least $51.000 in cash. Required: 1. A. A sales buddet, by month and in total b. A sichedule of expecied cash collections, by month and in total C. A menchopdiee purchases budget in units and in dolars. Show the budget by morth and in rotal a. A schedule of expected cash dishursernents for merchandise purchases, by ioorh and in total 2. A cosh budpet Snow the bufget by imonts and in fotat Determine any botiowing that would be needed to maintain the nainmum cash balance of 55t000 J. A budgeted incoing statement for the three-month period ending June 30 . Use the cantribulion approach 4. A budgeted batance sheet as of June 30 You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets iocated 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- $11 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): 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 $4.10 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: Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,500 in new equipment during May and $41,000 in new equipment during June; both purchases wir be for cash. The company declares dividends of $15,750 each quarter, payable in the first month of the following quarter. The cormpany's balance sheet as of March 31 is given below: The company's balance sheet as of March 31 is given below: The company maintains a minimum cash balance of $51,000. 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 $51,000 in cash. Required: 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 minimum cash balance of $51,000. 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