rCashAccounts receivable ($26,000 February sales; $320,000 March sales)InventoryPrepaid insuranceProperty and equipment (net)Total assetsLiabilities and Stockholders' EquityAccounts payableDividends payableCommon stockRetained earningsTotal liabilities and stockholders' equity€74,000346,000104,00021,000950,000$1,495,000$ 100,00015,000800,000580,000$1,495,000The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of amonth; any repayments are made at the end of a month.31.1The company has an agreement with a bank that allows the company to borrow in increments of $1,000 atthe beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assumethat interest is not compounded. At the end of the quarter, the company would pay the bank all of theaccumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while stillretaining at least $50,000 in cash.wwwby mandRequired: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 bemaintain the minimum cash balance of $50,00€PRPwa Linemoder2dmaršā sMIASVERATHECREPast.SURE⠀ rretail outlets located in shopping malls across the country. In the past, the company has done very little in theway of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trainedin budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, youhave worked with accounting and other areas to gather the information assembled below.The company sells many styles of earrings, but all are sold for the same price-$10 per pair. Actual sales ofearrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):1January (actual)February (actual)March (actual)April (budget)May (budget)Variable:The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on handat 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 ofpurchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month's salesare 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:Fixed:Sales commissionsAdvertisingRent20,00026,00040,00065,000Salaries100,000UtilitiesInsuranceJune (budget)July (budget)August (budget)September (budget)Depreciation50,00030,00028,00025,0004% of saleshandiby wrane that was be read$200,000$18,000$106,000$7,000$3,000$14,000page 404Insurance 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 equipmentduring June; both purchases will be for cash. Thein the first month of the following quarter.TaNICATHECHEPAREin the month foSunoclecit⠀Buk

Sales budget is that budget which shows expected sales revenue to be earned by the business over the…

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 Retained earnings Total liabilities and stockholders' equity $ 74,000 346,000 104,000 21,000 950,000 $1,495,000 $ 100,000 15,000 800,000 580,000 $1,495,000 2 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. 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.

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 14P: Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl’s Doll...