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You have just been hired as a new management trainee by Earrings Unlimited, a distributor of eamings to various retail ointets located in shopping mals across the country. In the past, the company has done very litke in the way of budyeting and at centain times of the year has experienced a shortage of cash. Since you are well treined 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 selis many styles of earrngs, but all are sold for the same price-si7 per paic. Actunl sakes of earrings for the last three months and budgeted sales for the noxt six months follow (in pairs of eartings) The concentration of sales before and during May is due to Mothers Day. Sulficient inventory showid be on turnd at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $5.80 for a pair of earrings One- haif of a month's purchases is paid for in the month of purchase: the other haif is paid for in the following month AlLhales are on crodit. Onily 20 of of a month's sales are colected in the month of thale. An addutional 70x is coliected in the foliowng month, and the reminining 10x is colected in the second morth folicwing sme, ded debti have been negliglble. Monthly operating expenses for the company are given below Insurance is paid on an annual basis, in November of each yedr. wil be for cosh. The company declares cividends of 528.500 ench quartes payable in the flint month of the tolawing quarter The companys balance sheet as ot Maren 31 is given thetow. The compary plans to purchase $25,000 in new equipment during May and $58,000 in new equipment during June; both purchases Will be for cash. The company declares dividends of $28,500 each quarter, payable in the first month of the following quarter. The compeny's balance sheet as of March 31 is 9 ven below? The compony maintains a minimum cash baiance of 168.000. Al borfowing is done at the beginning of a menths any repayments are made at the end of a month. The compeny has an agreement with a benk that allows the company to bonow in increments of $1.000 at the beginning of each month. The interest rate on these loans is tis per month and for iniplicity we wet assume that interest is not comoeunded. At the end of the quater, the company would pay the bank alt of the accumulated interest on the loan and at much of the loan as possible (n increments of \$1,000), while stili retaining at leas 568.000 in cash. Requiredt Prepare a master budget for the three month period ending June 30 inelude the following detated scheduies: I a. A siles budget, by month and in total. b. A schedule of expected cash collections, by month and in totat C. A merchandise purchases budget in units and in dollars. Show the tyidget by month and in total. d. A schedule of expected cash disbursements for merchandise fiufchases, by month and in totat 2. A cheh budget. Show the budget ty morith and in totel Determine any bottowing that would be needed to maintiain the manimum cosh baiance of $68.000 1. A budgeted income statement for the three-month pentad ending Jine 30 . Use the contribution approach. 4. A budpeted bainice sheet as of June 30 . Complete this quention by entering your answers in the tabs below. You have just been hired as a new management trainee by Earrings Unlimited, a distributor of eamings to various retail ointets located in shopping mals across the country. In the past, the company has done very litke in the way of budyeting and at centain times of the year has experienced a shortage of cash. Since you are well treined 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 selis many styles of earrngs, but all are sold for the same price-si7 per paic. Actunl sakes of earrings for the last three months and budgeted sales for the noxt six months follow (in pairs of eartings) The concentration of sales before and during May is due to Mothers Day. Sulficient inventory showid be on turnd at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $5.80 for a pair of earrings One- haif of a month's purchases is paid for in the month of purchase: the other haif is paid for in the following month AlLhales are on crodit. Onily 20 of of a month's sales are colected in the month of thale. An addutional 70x is coliected in the foliowng month, and the reminining 10x is colected in the second morth folicwing sme, ded debti have been negliglble. Monthly operating expenses for the company are given below Insurance is paid on an annual basis, in November of each yedr. wil be for cosh. The company declares cividends of 528.500 ench quartes payable in the flint month of the tolawing quarter The companys balance sheet as ot Maren 31 is given thetow. The compary plans to purchase $25,000 in new equipment during May and $58,000 in new equipment during June; both purchases Will be for cash. The company declares dividends of $28,500 each quarter, payable in the first month of the following quarter. The compeny's balance sheet as of March 31 is 9 ven below? The compony maintains a minimum cash baiance of 168.000. Al borfowing is done at the beginning of a menths any repayments are made at the end of a month. The compeny has an agreement with a benk that allows the company to bonow in increments of $1.000 at the beginning of each month. The interest rate on these loans is tis per month and for iniplicity we wet assume that interest is not comoeunded. At the end of the quater, the company would pay the bank alt of the accumulated interest on the loan and at much of the loan as possible (n increments of \$1,000), while stili retaining at leas 568.000 in cash. Requiredt Prepare a master budget for the three month period ending June 30 inelude the following detated scheduies: I a. A siles budget, by month and in total. b. A schedule of expected cash collections, by month and in totat C. A merchandise purchases budget in units and in dollars. Show the tyidget by month and in total. d. A schedule of expected cash disbursements for merchandise fiufchases, by month and in totat 2. A cheh budget. Show the budget ty morith and in totel Determine any bottowing that would be needed to maintiain the manimum cosh baiance of $68.000 1. A budgeted income statement for the three-month pentad ending Jine 30 . Use the contribution approach. 4. A budpeted bainice sheet as of June 30 . Complete this quention by entering your answers in the tabs below

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