Wild Wood Company's management prepares its master budget using the following information. The budget covers the months

Question:

Wild Wood Company's management prepares its master budget using the following information. The budget covers the months of April, May, and June. Wild Wood is a merchandiser.

Assets Cash Accounts receivable Merchandise inventory (8,800 units x $15).. Equipment...... Less: Accumulated

Additional Information
a. Sales for March were 10,000 units. Each month's sales units are expected to exceed the prior month's sales units by $10 %$ . The product's selling price is $$ 25$ per unit.
b. Company policy calls for a given month's ending merchandise inventory to equal $80 %$ of next month's budgeted unit sales. The March 31 merchandise inventory of 8,800 units complies with the policy. The purchase price is $$ 15$ per unit.
c. Sales commissions of $12 %$ of sales are paid in the month of the sales. The sales manager's monthly salary will be $$ 3, 500$ in April and $$ 4, 000$ per month thereafter.
d. Monthly general and administrative expenses include $$ 8, 000$ of administrative salaries, $$ 5, 000$ of depreciation, and $0.9 %$ monthly interest on the long-term note payable.

e. The company expects $30 %$ of sales to be for cash and the remaining $70 %$ on credit. Credit sales are collected in full in the month following the sale (none are collected in the month of the sale).
f. All merchandise purchases are on credit, and no payables arise from any other transactions. All credit purchases (recorded in accounts payable) are paid in the month following the purchase.
g. The minimum ending cash balance for all months is $$ 50, 000$ . If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of $1 %$ at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be used to repay any loans.
h. Dividends of $$ 80, 000$ are to be declared and paid in May.
i. Income taxes are budgeted at $30 %$ in the quarter. No cash payments for income taxes are to be made during the second calendar quarter.
j. Equipment purchases for cash of $$ 55, 000$ are scheduled for June.
Required
Prepare the following budgets and schedules for each month of April, May, and June. In addition, compute the three-month total for parts 1, 3, and 4 for use in preparing financial statements.

1. Sales budget, including budgeted sales for July.
2. Merchandise purchases budget.
3. Selling expense budget.
4. General and administrative expense budget.
5. Schedule of cash receipts from sales.
6. Schedule of cash payments for merchandise purchases.
7. Cash budget.
8. Budgeted income statement, budgeted statement of retained earnings, and budgeted balance sheet.