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Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter.

a.	As of March 31 (the end of the prior quarter), the companys balance sheet showed the following account balances:

Cash	$	9,000
Accounts receivable		38,400
Inventory		12,240
Buildings and equipment (net)		208,000
Accounts payable			$	16,200
Capital stock				140,000
Retained earnings				111,440
	$	267,640	$	267,640

b.	Actual sales for March and budgeted sales for AprilJuly are as follows:

March (actual)	$48,000
April	$68,000
May	$78,000
June	$83,000
July	$38,000

c.	Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.
d.	The companys gross margin percentage is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
e.	Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $6,000 per month; shipping, 6% of sales; advertising, $4,800 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $4,000 for the quarter.
f.	Each months ending inventory should equal 30% of the following months cost of goods sold.
g.	Half of a months inventory purchases are paid for in the month of purchase and half in the following month.
h.	Equipment purchases during the quarter will be as follows: April, $9,000; and May, $7,000.
i.	Dividends totaling $2,000 will be declared and paid in June.
j.	Management wants to maintain a minimum cash balance of $8,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:
Using the data above, complete the following statements and schedules for the second quarter:
1.	Schedule of expected cash collections:

Schedule of expected cash collections
	April	May	June	Total
Cash sales	$ 13,600	$	$	$
Credit sales	38,400
Total collections	$ 52,000	$	$	$

2a.	Merchandise purchases budget. (Input all amounts as positive values.)

Merchandise purchases budget
	April		May	June	Total
Budgeted cost of goods sold	$ 40,800		$ 46,800	$	$
(Click to select)AddDeduct: desired ending inventory	14,040
Total needs	54,840
(Click to select)DeductAdd: beginning inventory	12,240
Required purchases	$ 42,600		$	$	$

2b.	Schedule of expected cash disbursements for merchandise purchases: (Leave no cells blank - be certain to enter "0" wherever required.)

Schedule of cash disbursements for purchases
	April	May	June	Total
For March purchases	$ 16,200	$	$	$ 16,200
For April purchases	21,300	21,300		42,600
For May purchases
For June purchases
Total cash disbursements for purchases	$ 37,500	$	$	$

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