Variable: Sales commissions 5% of sales Fixed: Adver0sing $450,000 Rent 20,000 Salaries and wages 185,000 Power and
Question:
Variable: Sales commissions 5% of sales Fixed: Adver0sing $450,000 Rent 20,000 Salaries and wages 185,000 Power and heat 34,000 Insurance 4,000 Deprecia0on 20,000 All selling and administra0ve expenses are paid in the month they are incurred except for rent which is paid every six months in February and August. Deprecia0on is a non-cash expense and includes deprecia0on on the new equipment. The company plans to purchase new equipment cos0ng $80,000 in September. The company declared a $50,000 dividend in June that is payable in July. The following is the companys balance sheet at June 30: ASSETS Cash $ 100,000 Accounts receivable (from May & June sales) 1,500,000 Inventory 250,000 Prepaid rent 20,000 Fixed assets (net of deprecia0on) 860,000 TOTAL ASSETS $2,730,000 LIABILITIES & SHAREHOLDERS EQUITY Accounts payable $ 388,000 Dividends payable 50,000 Common shares 940,000 Retained earnings 1,352,000 TOTAL LIABILITIES & SHAREHOLDERS EQUITY $2,730,000 The company is required to maintain a minimum cash balance of $100,000 at the end of each month. All borrowing on the companys line of credit is done at the beginning of each month and repayments are made at the end of the month and borrowing must be done in increments of $1,000. The interest rate on the line of credit is 1% per month and must be paid at the end of each month based on the loan outstanding for that month. Required: 1. Prepare a master budget for the three-month period ending September 30 and include the following schedules:a. A sales budget by month and in total. b. A schedule of cash collec0ons from sales 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 by month and in total for the three-month period ending September 30. 3. A budgeted income statement for the three-month period ending September 30. Use the contribu0on format. 4. A budgeted balance sheet as at September 30.