Your task is to prepare a master budget for the next three months, starting April 1st. The company would like a minimum ending cash balance each month on $15,000. The item being sold is lipstick and is sold to retailers at $25 each. Recent forecasted sales in units are as follows:

January (acutal)	20,000	July	40,000
Feb (actual)	24,000	August	36,000
March (acutal)	28,000	September	32,000
April	38,000
May	65,000
June	50,000

Ending inventory is supposed to be equal to 90% of the next months sales in units. The cost of each lipstick is $12. Purchases are paid for in the following manner: 50% in the month of the purchase and the remaining 50% paid in the month following the purchase. All sales to the distributors are made on credit terms with no discount and payable within 15 days. 25% of a months sales are collected by the end of the month in which the sale occurred. 50% is collected in the month following the sale and the remaining 25% is collected in the second month following the sale. Bad debts have been negligible supporting the credit terms as favorable. Below find the monthly selling and administrative expenses:

Variable:
Sales Commissions	$1 per lipstick
Fixed:
Wages and Salaries	62,000
Utilities	41,000
Insurance	1,800
Depreciation	3,500
Miscellaneous	14,000

Selling and administrative expenses are paid during the month in cash except for depreciation. Insurance is pre-paid for the duration of the policy. A one time infringement penalty is to be expensed and paid during May for $300,000 cash. The lipstick division contributes to the corporate dividend at a rate of $150,000 each quarter, payable in the first month of the following quarter.

The lipstick companys balance sheet as of March 31st is as follows:

Assets
Cash	44,000
Accounts Receivable	675,000
Inventory (34,200) units	410,400
Prepaid insurance	16,200
Fixed assets, net of depreciation	472,700
Total Assets	1,618,300
Liabilities and stockholders equity
accounts payable	222,000
dividneds payable	150,000
capital stock	750,000
retained earnings	496,300
total liabilities and stockholders equity	1,618,300

An agreement with the bank allows you to borrow in increments of $1,000 at the beginning of each month up to a total loan amount of $350,000. Interest rate on the loan is 8$ annually and is not compounded so its simple interest only. At quarter end the company will pay the bank all of the accumulated interest on the loan and as much of the balance of the loan as possible in $1,000 increments while retaining the minimum $15,000 cash balance.

Prepare a master budget for the three months ending June 30th. The following budget schedules and financial statements must be included:

1.Sales budget by month and total for the quarter-Completed what are calculations?

2.Schedule of expected cash collections from sales, by month and total-Completed what are calculations?

3.Merchandise purchases budget in units and in dollars. Show the budget by month and total-Completed what are calculations?

4.Schedule of expected cash disbursements for merchandise purchases, by month and total- Completed what are calculations?

5.Cash Budget. Show the cash budget by month and in total- in spreadsheet and show calculations

6.Prepare a budgeted income statement for the three months ending June 30 use the contribution method-in spreadsheet and show calculations

7.Prepare a budgeted balance sheet as of june 30- in spreadsheet and show calculations

7.Explain if there is value for the company in you completing all this work, are the benefits from the work worth the effort, and is there value in having the master budget?

Sales Budget	April	May	June	Total
Unit Sales	38,000	65,000	50,000	153,000
Selling price per unit	$25.00	$25.00	$25.00	$25.00
Total Sales	$950,000.00	$1,625,000.00	$1,250,000.00	$3,825,000.00
Schedule of Expected Cash collections	April	may	june	total
Accounts receivable, Feb	$150,000.00			$150,000.00
Account receivable, Mar	$350,000.00	$175,000.00		$525,000.00
April Sales	$237,500.00	$475,000.00	$237,500.00	$950,000.00
May Sales		$406,250.00	$812,500.00	$1,218,750.00
June Sales			$312,500.00	$312,500.00
total cash collections	$737,500.00	$1,056,250.00	$1,362,500.00	$3,156,250.00
Merchandise Purchase Budget	April	may	june	total	july
sales in units	38,000	65,000	50,000	153,000	40,000
add: ending inventory	58,500	45,000	36,000	36,000
required units of avaialble inventory	96,500	110,000	86,000	189,000
less:opening inventory	34,200	58,500	45,000	34,200
units to be purchased	62,300	51,500	41,000	154,800
cost of merchandise	$12.00	$12.00	$12.00	$12.00
total cost of merchandise to be purchased	$747,600.00	$618,000.00	$492,000.00	$1,857,600.00
Schedule of Expected Cash disbursement	April	may	june	total
account payable, march	$222,000.00			$222,000.00
april purchases	$373,800.00	$373,800.00		$747,600.00
may purchases		$309,000.00	$309,000.00	$618,000.00
june purchases			$246,000.00	$246,000.00
total cash disbursement	$595,800.00	$682,800.00	$555,000.00	$1,833,600.00