Please complete and correct parts 2, 3, and 4.

Please complete and correct parts 2 (cash budget),3 (less interest expense), and 4 (cash and retained earnings).

Knockoffs Unlimited, a nationwide distributor of low-cost imitation designer necklaces, has an exclusive franchise on the distribution of the necklaces, and sales have grown so rapidly over the past few years that it has become necessary to add new members to the management team. To date, the company's budgeting practices have been inferior, and at times the company has experienced a cash shortage. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are eager to make a favourable impression on the president and have assembled the information below. The necklaces are sold to retailers for $10 each. Recent and forecast sales in units are as follows: January (actual) February (actual) March (actual) April May 28,500 43,000 56,000 82,000 116,000 June July August September 67,000 47,000 45,000 42,000 The large buildup in sales before and during May is due to Mother's Day. Ending inventories should be equal to 40% of the next month's sales in units. The necklaces cost the company $4 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected by month-end. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. The company's monthly selling and administrative expenses are given below: 4% of sales Variable: Sales commissions Fixed: Advertising Rent Wages and salaries Utilities Insurance Depreciation $ 251,000 26,500 126,400 13,800 6,400 31,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $22,800 in new equipment during May and $57,000 in new equipment during June; both purchases will be paid in cash. The company declares dividends of $18,400 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below: 91,000 Assets Cash Accounts receivable ($43,000 February sales; $448,000 March sales) Inventory Prepaid insurance Fixed assets, net of depreciation Total assets Liabilities and Shareholders' Equity Accounts payable Dividends payable Common shares Retained earnings Total liabilities and shareholders' equity 491,000 131,200 44,800 1,035,000 $1,793,000 $ 132,800 18,400 970,000 671,800 $1,793,000 The company wants a minimum ending cash balance each month of $50,000. All borrowing is done at the beginning of the month, with any repayments made at the end of the month. The interest rate on these loans is 1% per month and must be paid at the end of each month based on the outstanding loan balance for that month. 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. Answer is complete and correct. Sales budget Budgeted sales in units Selling price per unit Total sales April 82,000 $ 10 $ 820,000 May 116,000 10 1,160,000 June 67,000 10 670,000 Quarter 265,000 10 2,650,000 $ $ $ $ $ $ b. A schedule of expected cash collections from sales, by month and in total. Answer is complete and correct. February sales March sales April sales May sales June sales Total cash collections KNOCKOFFS UNLIMITED Schedule of Expected Cash Collections April May June $ 43,000 $ 0$ 0 392,000 56,000 0 164,000 574,000 82,000 0 232,000 812,000 0 0 134,000 $ 599,000 $ 862,000 $ 1,028,000 Quarter $ 43,000 448,000 820,000 1,044,000 134,000 $ 2,489,000 d. A schedule of expected cash disbursements for merchandise purchases, by month and in total. March purchases April purchases May purchases June purchases Total cash disbursements Answer is complete and correct. KNOCKOFFS UNLIMITED Schedule of Expected Cash Disbursements April May June $ 132,800 $ 0 $ 0 191,200 191,200 0 192,800 192,800 0 118,000 $ 324,000 $ 384,000 310,800 Quarter $ 132,800 382,400 385,600 118,000 $ 1,018,800 0 0 2. A cash budget. Show the budget by month and in total. (Round your Intermediate calculations and final answers to the nearest whole dollar. Also, round down your Interest calculations to the next whole dollar amount. Cash deficiency, repayments and Interest should be Indicated by a minus sign. Do not leave any empty spaces; Input a 0 wherever It Is required.) Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Cash Budget For the Three Months Ending June 30 April May June IS 91,000 IS 50.000 50.000 599,000 862.000 1,028,000 690.000 912.000 1,078,000 S Quarter 91.000 2.480,000 2,580,000 Cash balance, beginning Add receipts from customers Total cash available Less disbursements: Purchase of inventory Advertising Rent 324,000 251.000 26,500 126,400 32,800 13,800 18.400 0 000000 384.000 251.000 26,500 126,400 48,400 13.800 310.800 251.000 26.500 126,400 26.800 1.018,800 753,000 79,500 379,200 100.000 41,400 Salaries and wages Sales commissions 13.800 0 0 22,800 870.900 41.100 792,900 (102.900) 18.400 79,800 2.478,100 103.900 57.000 812,300 265.700 Utilities Dividends paid Equipment purchases Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, ending 10.550 X 0 154.444 0 (1.544) 152.900 50.000 (1.650) 8.900 0 (164,994) (1.650) X (163.644) 99,056 IS 164.994 X (164,994) (4.843) X (4.843) 99,057 IS S 50.000 s 3. A budgeted income statement for the three-month period ending June 30. Use the variable costing approach. Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Income Statement For the Three Months Ended June 30 S 2.650.000 Sales revenue Variable expenses: Cost of goods sold $ 1,060,000 106,000 1,168,000 1.484.000 Commissions Contribution margin Fibed expenses: Advertising Rent Wages and salaries Utilities 753,000 79,500 00000 379,200 Insurance Depreciation 41,400 19.200 93.000 0 0 1,385,300 Operating income Less interest expense 000 118.700 (4.843) 113.857 Net income S 4. A budgeted balance sheet as of June 30. Answer is complete but not entirely correct. KNOCKOFFS UNLIMITED Budgeted Balance Sheet June 30 Assets Cash S 99,057 Accounts receivable 652.000 Inventory 75,200 Prepaid insurance 25.600 Fixed assets, net of depreciation 1,021,800 0 0 Total assets s 1.873.657 Liabilities and Shareholders' Equity Accounts payable, purchases s 118.000 Dividends payable 18.400 Common shares 970.000 Retained earnings 767.257 X 0 0 Total liabilities and shareholders' equity S 1.873.657