Need help with this, please. Please provide specific formula and reference for it.

Chapter 8 Group Exercise Earrings Unlimited.pdf Page 2 of 2 (i) Chapter 8 Budget Exercise - Earrings Unlimited page 2 of 2 The company's balance sheet as of March 31 is given below: The company maintains a minimum cash balance of $50,000. 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 the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000 ), while still retaining at least $50,000 in cash. Required: Prepare a master budget for the three-month period ending June 30 . Include the following detailed schedules: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $50,000. 3. A budgeted income statement for the three-month period ending June 30 . Use the contribution approach. 4. A budgeted balance sheet as of June 30 . EARRINGS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June Quarter Cash balance, beginning Add receipts from customers 47 Total cash available Less disbursements: Merchandise purchases Advertising Rent Salaries Commissions ( 4% of sales) Utilities Equipment purchases Dividends paid Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, ending = Chapter 8 Group Exercise Earrings Unlimited.pdf Page 2 of 2 (i) Chapter 8 Budget Exercise - Earrings Unlimited page 2 of 2 The company's balance sheet as of March 31 is given below: The company maintains a minimum cash balance of $50,000. 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 the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000 ), while still retaining at least $50,000 in cash. Required: Prepare a master budget for the three-month period ending June 30 . Include the following detailed schedules: 1. a. A sales budget, by month and in total. b. A schedule of expected cash collections, by month and in total. c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total. d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. 2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $50,000. 3. A budgeted income statement for the three-month period ending June 30 . Use the contribution approach. 4. A budgeted balance sheet as of June 30 . EARRINGS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June Quarter Cash balance, beginning Add receipts from customers 47 Total cash available Less disbursements: Merchandise purchases Advertising Rent Salaries Commissions ( 4% of sales) Utilities Equipment purchases Dividends paid Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, ending =