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I NEED ANSWERS FOR QUESTIONS 2, 3 and 4. THANK YOU!!

XYZ is a distributor of earrings to retail outlets in shopping malls across the US. The company has had cash shortages in the past due to insufficient budgeting. As the newly hired management trainee, you have taken the initiative to prepare a master budget for the second quarter by collaborating with the accounting and other relevant departments. The company sells various styles of earrings at a fixed price of $20 per pair. The company has provided information on actual and budgeted sales for the next six month, which is reported below:

The significant concentration of sales expected before and during May, which is Mother's Day. The company should maintain enough inventory at the end of each month to fulfill 40% of the following month's sales. The suppliers are paid $8 for a pair of earrings, with half of the purchases paid for in the month of purchase and the remaining half paid for in the following month. All sales are on credit, and the company collects only 20% of sales in the same month, with 70% collected in the following month, and the remaining 10% collected in the second month following sale. Bad debts have not been an issue in the past. The monthly operating expenses for the company are also listed.:

The insurance premium is paid annually in November. The company intends to buy $32,000 worth of new equipment in May and $80,000 worth of new equipment in June, both of which will be paid in cash. The company declares dividends of $30,000 each quarter, which will be payable in the first month of the subsequent quarter. The companys balance sheet as of March 31 is given below:

The company has a policy of keeping a minimum cash balance of $100,000. All borrowing is done at the start of a month, and any repayments are made at the end of the month. The company has an agreement with a bank that permits borrowing in $2,000 increments at the beginning of each month, with an interest rate of 1% per month. Interest is assumed to be non-compounding. At the end of the quarter, the company will pay the bank all of the interest accumulated on the loan and as much of the loan as possible (in increments of $2,000), while still retaining at least $100,000 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 $100,000.

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

\begin{tabular}{|l|l|l|l|} \hline January (actual) & 40,000 & June (budgeted) & 100,000 \\ \hline February (actual) & 52,000 & July (budgeted) & 60,000 \\ \hline March (actual) & 80,000 & August (budgeted) & 56,000 \\ \hline April (budgeted) & 130,000 & September (budgeted) & 50,000 \\ \hline May (budgeted) & 200,000 & & \\ \hline \end{tabular} Variable: Sales commissions 4% of sales Fixed: Rent Insurance Assets Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $148,000 Accounts receivable ($52,000 February sales; $640,000 March sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,000 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000 Property and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 1900,000 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $$2,990,000 Liabilities and Stockholders' Equity Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$200,000 Dividends payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1600,000 Total liabilities and stockholders' equity $2,990,000 \begin{tabular}{|l|l|l|l|} \hline January (actual) & 40,000 & June (budgeted) & 100,000 \\ \hline February (actual) & 52,000 & July (budgeted) & 60,000 \\ \hline March (actual) & 80,000 & August (budgeted) & 56,000 \\ \hline April (budgeted) & 130,000 & September (budgeted) & 50,000 \\ \hline May (budgeted) & 200,000 & & \\ \hline \end{tabular} Variable: Sales commissions 4% of sales Fixed: Rent Insurance Assets Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $148,000 Accounts receivable ($52,000 February sales; $640,000 March sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,000 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,000 Property and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 1900,000 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $$2,990,000 Liabilities and Stockholders' Equity Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$200,000 Dividends payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1600,000 Total liabilities and stockholders' equity $2,990,000

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