Chris Corporation prepares its master budget on a quarterly basis. The following data have been assembled to assist in the preparation of the master budget for the second quarter of 2019:

1. Actual sales for March and budgeted sales for the next four months are as follows:

March $120,000

April 180,000

May 190,000

June 130,000

July 110,000

1. The company's gross profit rate is 44 percent of sales.
2. Monthly expenses are budgeted as follows: salaries and wages, $12,000 per month; advertising, $15,000 per month; utilities, 2 percent of sales; depreciation, $8,000 per month; other expense, 3 percent of sales; and rent, $17,000 per month.
3. At the end of each month, inventory is to be on hand equal to 25 percent of the following month's sales needs, stated at cost.
4. Seventy percent of a month's inventory purchases are paid for in the month of purchase; the rest is paid for in the following month.
5. Sales are 40 percent for cash and the rest on account. All sales on account are collected the month following sale. The accounts receivable on March 31 are a result of March credit sales.
6. As of March 31, 2019 (the end of the prior quarter), the company's general ledger showed the following account balances:

Debits Credits

Cash $25,000 Accounts Receivable 75,000

Inventory 50,000

Plant and Equip (net) 100,000

Accounts Payable $60,000

Short-term Notes Payable 20,000

Capital Stock 125,000

Retained earnings _______ 45,000

$250,000 $250,000

1. In May, the company will purchase a new copy machine for $25,000 in cash. During June, other equipment will be purchased for cash at a cost of $20,000. Assume there will be no equipment purchases in April 2019.
2. During April and May, the company will declare and pay $14,000 in cash dividends per month. Assume no dividends will be paid in June of 2019.
3. The company must maintain a minimum cash balance of $7,500. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid at the end of each month. The interest rate is 12 percent per annum. (Figure interest in whole months, e.g., 1/12, 2/12.)

COMPANY:					Practice Corporation
QUARTER:					For the quarter ended March 31, 2019
					March 31, 2019
GENERAL LEDGER BALANCES AS OF:					December 31, 2018
Current Assets:
	Cash				$12,000
	Accounts Receivable				80,000
	Inventory				50,000
	Total Current Assets					$142,000
	Plant and Equipment (net)					145,000
Total Assets						$287,000
Current Liabilities:
	Accounts Payable					$45,000
	Short-term Borrowing					0
Stockholders' Equity:
	Capital Stock				$185,000
	Retained Earnings				57,000
	Total Stockholder's Equity					242,000
Total liabilities and stockholders' equity						$287,000
ACTUAL SALES/BUDGETED SALES:
	December					$150,000
	January					170,000
	February					180,000
	March					140,000
	April					120,000
Sales Breakdown
	Cash					25%
	Credit					75%
Gross Profit Rate as a % of sales						40%
	COGS					60%
Monthly Expenses
	A expense					$15,000
	B expenses					12,000
	C expenses					18,000
	D expenses					6,000
	E expense					1%
	F expenses					2%
Percentage of following month sales needs to be held in inventory stated at cost						35%
Inventory purchase payment breakdown
	Month of purchase					50%
	Next month					50%
Capital Purchases in Cash
	January	New Computer				$15,000
	February	Copier				10,000
	March	Other Equipment				18,000
Cash Dividends
	January					$5,000
	February

Answer rating: 100% (QA)

COMPANY Chris Corporation QUARTER For the quarter ended June 30 2019 June 30 2019 GENERAL LEDGER BAL... View the full answer