2.

You have just been hired as a new management trainee by Eartings Unilmited, a distributor of earrings to various retall outiets 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 experlenced 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-\$17 per paic. Actual sales of earings for the last three months and budgeted soles for the next six months follow (in pairs of earrings): The concentration of sales before and during May is due to Mother's Day. Sutficient inventery should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid \$5.30 for a pair of earrings. Orie-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 2.0% of a month's sales are collected in the month of sale. An additional 70\%s 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 glven below: surance is paid on an annual basis, in November of each year. he company plans to purchase $22,500 in new equipment during May and $53,000 in new equipment during June; both purchases ili be for cash. The company declares dividends of $24.750 each quarter, payable in the first month of the following quarter. he company's balance sheet as of March 31 is given below: he company maintains a minimum cash balance of $63,000. All borrowing is done at the beginning of a month; any tepayments are ade at the end of a month. he company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each ionth. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end f 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 crements of $1,000). while still retaining at least $63,000 in cash. lequired: repare a master budget for the three-month period ending June 30 . Include the following detailed schedules: 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 $63,000 3. A budgeted income statement for the three-mnth 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. Prepare a master budget for the three-month period ending June 30 that includes a sales budget, 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 $63,000. 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 thls question by entering your answers in the tabs below. Prepare a master budget for the three-month period ending June 30 that includes a sales budget, by month and in total. cash balance of $63,000. 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. Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash collections, 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 $63,000 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. Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) 2. A cash bucget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $63,000 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. Prepare a master budget for the three-month period encing June 30 that includes a schedule of expected cash disbursemesa for merchandise purchases, by month and in total. Cash Budget For the Three Monthe Ending June 30 Begirining cash balance Add collections from customers Total cash ivvailable Less cash disbursements: Merchandise purchases Advertising Rent Salaries Commissions Utilities Equiprent purchases Dividends paid Total cash disbursements Excess (deficiency) of cash availabie over disbursements Fintincing Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30