Exercise 1. (15 Points).

Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted:

	April		May
Sales .	$150,000		$157,500
Merchandise purchases	107,000		112,400
Operating expenses:
Payroll .	13,600		14,280
Advertising .	5,400		5,700
Rent .	2,500		2,500
Depreciation	7,500		7,500
End of April balances:
Cash .	30,000
Bank loan payable	26,000

Additional data:

(1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000.

(2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month.

(3) Operating expenses are paid in the month they are incurred.

(4) A minimum cash balance of $25,000 is required at the end of each month.

(5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000.

Prepare the company's cash budget for May. Show the ending loan balance at May 31.

Exercise 2. (15 Points).

Argenta, Inc. is preparing its master budget for the first quarter ending March 31. The following forecasted data relate to the first quarter:

Unit sales:
January ..	40,000
February	55,000
March	50,000
Unit sales price .	$25
Cost of goods sold per unit ...	$13
Expenses:
Commissions	10% of sales
Rent ..	$20,000/month
Advertising ..	15% of sales
Office salaries ..	$75,000/month
Depreciation .	$50,000/month
Interest ..	15% annually on a $250,000 note payable
Tax rate.	40%

Prepare a budgeted income statement for the first quarter.