The company sells many styles of earrings, but all are sold for the same price-$10 per...

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The company sells many styles of earrings, but all are sold for the same price-$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) March (actual) April (budget), May (budget)) 20,000 June (budget) 26,000 July (budget). 40,000 August (budget) 65,000 100,000 September (budget) 50,000 30,000 28,000 25,000 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is pald for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. 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. Monthly operating expenses for the company are given below: Variable: Sales commissions 4% of sales: Fixed Advertising Rent Salaries Utilities $ 200,000 $ 18,000 $106,000 MC Insurance Depreciation. $ 7,000 $3,000 $14,000 Insurance is paid on an annual basis, in November of each year. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June: both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below. Assets Cash Accounts receivable ($26,000 February sales; $320,000 March sales) Inventory Prepaid insurance Property and equipment (net). Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock $ 74,000 346,000 104,000 Retained earnings Total liabilities and stockholders' equity 21,000 950,000 $1,495,000 $ 100,000 15,000 800,000 580,000 $1,495,000 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 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 $50,000 in cash. Mc Prepare a master budget for the three-month period ending June 30 that includes 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. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 April May June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent 0 0 0 0 0 0 Salaries 0 Commissions Utites 0 D Equipment purchases Dividends paid 0 0 Total cash disbursements 0 0 0 0 Excess (deficiency) of cash available over disbursements O 0 0 0 Finanong Borrowings Repayments Mavt 0 0 1 Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent Salaries Commissions Ubilities Equipment purchases Dividends paid For the Three Months Ending June 30 April May June Quarter Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 < Required 1D Required 3> The company sells many styles of earrings, but all are sold for the same price-$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) February (actual) March (actual) April (budget), May (budget)) 20,000 June (budget) 26,000 July (budget). 40,000 August (budget) 65,000 100,000 September (budget) 50,000 30,000 28,000 25,000 The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is pald for in the following month. All sales are on credit. Only 20% of a month's sales are collected in the month of sale. 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. Monthly operating expenses for the company are given below: Variable: Sales commissions 4% of sales: Fixed Advertising Rent Salaries Utilities $ 200,000 $ 18,000 $106,000 MC Insurance Depreciation. $ 7,000 $3,000 $14,000 Insurance is paid on an annual basis, in November of each year. Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June: both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below. Assets Cash Accounts receivable ($26,000 February sales; $320,000 March sales) Inventory Prepaid insurance Property and equipment (net). Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock $ 74,000 346,000 104,000 Retained earnings Total liabilities and stockholders' equity 21,000 950,000 $1,495,000 $ 100,000 15,000 800,000 580,000 $1,495,000 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 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 $50,000 in cash. Mc Prepare a master budget for the three-month period ending June 30 that includes 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. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 April May June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent 0 0 0 0 0 0 Salaries 0 Commissions Utites 0 D Equipment purchases Dividends paid 0 0 Total cash disbursements 0 0 0 0 Excess (deficiency) of cash available over disbursements O 0 0 0 Finanong Borrowings Repayments Mavt 0 0 1 Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent Salaries Commissions Ubilities Equipment purchases Dividends paid For the Three Months Ending June 30 April May June Quarter Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 < Required 1D Required 3>