Monthly operating expenses for the company are given below Variable Sales commissions 4% of sales Fixed Advertising Rent Salaries Utilities Insurance S 210,000 S 19,000 S 108,000 S 7,500 S 3.100 S 15,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,500 in new equipment during May and $41,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,750 each quarter payable in the first month of the following quarter A listing of the company's ledger accounts as of March 31 is given below: Assets Cash Accounts receivable ($28,820 February sales $353,760 March sales) $ 75,000 382,580 106,928 21,500 960,000 Prepaid insurance Property and equipment (net) Total assets S1,546,008 Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings Total liabilities and stockholders' equity S 101,000 15,750 820,000 609,258 $1,546,008 The company maintains a minimum cash balance of $51,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $51,000 in cash. Required 1. Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets a. A sales budget, by month and in total Sales Budget April May June Quarter 65,200 100,200 215,600 Budgeted unit sales Selling price per unit Total sales 50,200 11$ S717,200 S 1,102,200$ 552,2002,371,600 b. A schedule of expected cash collections from sales, by month and in total. Earrings Unlimited Schedule of Expected Cash Collections April May June Quarter $28,820 309,540 143,440 February sales March sales April sales May sales June sales Total cash collections $28,820 353,760 717.200 881,760 55,220 481,800 S 656,480898,4802,036,760 44,220 502,040 110,220 71,720 771,540 55,220 c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost of purchases to 1 decimal place.) Earrings Unlimited Merchandise Purchases Budget April May June Quater Budgeted unit sales Add: Desired ending merchandise inventory Total needs 65,200 40,080 105,280 (26,080) 79,200 100,200 50,200 2,080 62,280 (20,080) 42,200 215,600 12,080 227,680 (26,080) 201,600 11.0 2,217,600 20,080 120,280 40,080 Beginning merchandise inventory Required purchases Unit cost Required dollar purchases 80,200 11.0$ 11.0 S 11.0 $ $ 871,200$882,200S 464,200 d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases April May June Quarter Accounts payable April purchases May purchases June purchases S 101,000 S 101,000 871,200 441,100 441,00882,200 232,100 232,100 Total cash payments S 536,600S 876,700 673,200 2,086,500 435,600 435,600 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 ales Variable expenses Fixed expenses: 4. A budgeted balance sheet as of June 30 Earrings Unlimited Budgeted Balance Sheet June 30 Assets ash Accounts receivable Inventory Prepaid insurance Property and equipment, net Total assets Liabilities and Stockholders' Equity Accounts payable, purchases Dividends payable Common stock tained earnings Total liabilities and stockholders' equity