You have just beenhired as a new management trainee by Earrings Unlimited, adistributor of earrings to various retail outlets located inshopping malls across the country. In the past, the company hasdone very little in the way of budgeting and at certain times ofthe year has experienced a shortage of cash. Since you are welltrained in budgeting, you have decided to prepare a master budgetfor the upcoming second quarter. To this end, you have worked withaccounting and other areas to gather the information assembledbelow.

The company sells manystyles of earrings, but all are sold for the same price—$13 perpair. Actual sales of earrings for the last three months andbudgeted sales for the next six months follow (in pairs ofearrings):

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Thank you in advance for the assistance.




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You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have 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-$13 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings) anuary(actual) February (actual) March (actual) April (budget) May (budget) 21,400une (budget) 27,400 July (budget) 41,400 August (budget) 66,400 September (budget) 51,400 31,400 29,400 26,400 101,400 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 $4.70 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid 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: 4% of sales Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $ 270,000 $ 25,000 $ 120,000 $ 10,500 $ 3,700 $ 21,000 Insurance is paid on an annual basis, in November of each year The company plans to purchase $19,500 in new equipment during May and $47000 in new equipment during June; both purchases will be for cash. The company declares dividends of $20,250 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below:
Earrings Unlimited Schedule of Expected Cash Collections April May June Quarter February sales March sales April sales May sales June sales Total cash collections
Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget May April June Quarter Budgeted unit sales Total needs Required purchases Unit cost Required dollar purchases
Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash disbursements for merchandise purchases, by month and in total. Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases June Quarter May April Accounts payable April purchases May purchases June purchases Total cash payments
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 $57,000. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 May April June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent Salaries Commissions Utilities Equipment purchases Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance
Prepare a master budget for the three-month period ending June 30 that includes a budgeted income statement for the three- month period ending June 30. Use the contribution approach. Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Variable expenses: Fixed expenses:
Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30 Earrings Unlimited Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity


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You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have 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-$13 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings) anuary(actual) February (actual) March (actual) April (budget) May (budget) 21,400une (budget) 27,400 July (budget) 41,400 August (budget) 66,400 September (budget) 51,400 31,400 29,400 26,400 101,400 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 $4.70 for a pair of earrings. One-half of a month's purchases is paid for in the month of purchase; the other half is paid 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: 4% of sales Sales commissions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation $ 270,000 $ 25,000 $ 120,000 $ 10,500 $ 3,700 $ 21,000 Insurance is paid on an annual basis, in November of each year The company plans to purchase $19,500 in new equipment during May and $47000 in new equipment during June; both purchases will be for cash. The company declares dividends of $20,250 each quarter, payable in the first month of the following quarter. The company's balance sheet as of March 31 is given below: Sales Budget April May Quarter June Budgeted unit sales Selling price per unit Total sales Earrings Unlimited Schedule of Expected Cash Collections April May June Quarter February sales March sales April sales May sales June sales Total cash collections Prepare a master budget for the three-month period ending June 30 that includes a merchandise purchases budget in units and in dollars. Show the budget by month and in total. (Round unit cost to 2 decimal places.) Earrings Unlimited Merchandise Purchases Budget May April June Quarter Budgeted unit sales Total needs Required purchases Unit cost Required dollar purchases Prepare a master budget for the three-month period ending June 30 that includes a schedule of expected cash disbursements for merchandise purchases, by month and in total. Earrings Unlimited Budgeted Cash Disbursements for Merchandise Purchases June Quarter May April Accounts payable April purchases May purchases June purchases Total cash payments 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 $57,000. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Earrings Unlimited Cash Budget For the Three Months Ending June 30 May April June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements Merchandise purchases Advertising Rent Salaries Commissions Utilities Equipment purchases Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance Prepare a master budget for the three-month period ending June 30 that includes a budgeted income statement for the three- month period ending June 30. Use the contribution approach. Earrings Unlimited Budgeted Income Statement For the Three Months Ended June 30 Variable expenses: Fixed expenses: Prepare a master budget for the three-month period ending June 30 that includes a budgeted balance sheet as of June 30 Earrings Unlimited Budgeted Balance Sheet June 30 Assets Total assets Liabilities and Stockholders' Equity Total liabilities and stockholders' equity