Quality Cases, a small company that provides services and makes protective cases for phones and tablets, has gathered data to prepare a master budget. Assume the following data for Quality Cases:

Other information:    
● The collection policy for credit sales is as follows: 25% in the month of sale; 75% in the subsequent month. The company is aware that some credit sales may not be collected, but believes that amount to be negligible because the salespeople will not sell to customers that do not pay on credit.

● The gross profit ratio is 45% of sales. The inventory policy is to have 5% of the next month’s sales in units (safety stock) available at the end of each month. All purchases are on credit. Seventy percent is paid in the same month of purchase; the remainder is paid in the month following the purchase.

● Selling and administrative salaries for June total $64,000 and will be paid in June. Accrued salaries from May of $8,000 will be paid in June.

● Existing buildings and equipment have a combined cost of $140,000, a useful life of 7 years, and no salvage value. Equipment with a cost of $12,000 is projected to be bought toward the end of June with cash. Land with a book value of $16,000 is projected to be sold for $13,000 in June.

● Rent, insurance, and advertising total $11,500 per month (paid at the end of each month).

● The cash balance on June 1 was $10,000. The June scheduled debt payment of $4,400 includes $400 of interest. The interest expense relates to a $72,000 note payable.

● For simplicity, ignore income taxes. The desired minimum cash balance is $20,000.

a. Calculate budgeted June cash receipts from operations (cash sales and collections of credit sales).

b. Calculate budgeted June inventory purchases (a template follows to assist with the analysis).

c. Calculate payments to suppliers in June.

d. Prepare a June income statement.

e. Calculate the budgeted June cash flow statement (a template follows to assist with the analysis).

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Month May (past actual) $12.50/unit June (forecasted) $12.50/unit July (forecasted) $12.50/unit Unit Sales Total Sales Cash Sales Credit Sales 32,000 $400,000 $10,000 $390,000 36,000 $450,000 $15,000 $435,000 39,200 $490,000 $18,000 $472,000