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1. CZ is a merchandising company engaged in the purchasing and selling of electrical appliances. You as a management accountant have been asked to prepare a complete master budget for your store for June, July and August, so you gather the following data as of may 31, 2005:

Cash$ 21,000Accounts Payable$ 340,000

Inventory300,000Owners' equity362,000

Accounts receivable261,000Total liabilities and

Net furnitures and fixtures120,000owners' equity702,000

Total Assets702,000

Recent and projected sales

April$200,000

May250,000

June500,000

July300,000

August 300,000

September200,000

Credit sales are 90% of total sales. Credit accounts are collected 80% in the month following the sale and 20% in the next following month. Assume that bad debts are negligible and can be ignored. The average gross profit on sales is 40%.

The policy is to acquire enough inventories each month to equal the following month's projected sales. All purchases are paid for in the month following purchase.

Salaries, wages and commissions average 20% of sales: all other variable expenses are 4% of sales. Fixed expenses for rent, property taxes, and miscellaneous payroll and other items are $ 40,000 monthly. Assume that these variable and fixed expenses require cash disbursements each month. Depreciation is $ 2,000 monthly.

In June, $ 40,000 is going to be disbursed for fixtures acquired in May. The May 31 balance of accounts payable includes this amount.

Assume that a minimum cash balance of $ 20,000 is to be maintained. Also assume that all borrowings are effective at the beginning of the month and all repayments are made at the end of the month of repayment. Interest is paid only at the repaying principal. Interest rate is 12% per annum: round interest computation to the nearest ten dollars.

Required

Prepare budgeted income statement for the coming quarter, a budgeted statement of monthly cash receipts and disbursements (for the next 3 months), and a budgeted balance sheet for August 30, 2005. All operations are evaluated on a before income tax basis. (Ignore income taxes).

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