I just need number 3 and 4 You have just been hired as a new management trainee
ID: 2527703 • Letter: I
Question
I just need number 3 and 4
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) January (actual) February (actual) March (actual) April (budget) May (budget) 20,600 June (budget) 26,600 July (budget) 40,600 August (budget) 65,600 September (budget) 50,600 30,600 28,600 25,600 100,600 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 $4.30 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:Explanation / Answer
Lokk at the bottom for the answers Schedule of Cash collection April May June Total February March July August Sales in units A 65600 100600 50600 216800 26600 40600 30600 28600 Sale Price 13 13 13 13 13 13 13 13 Sales in value 852800 1307800 657800 2818400 345800 527800 397800 371800 Feb sales 34580 34580 Marc sales (70%,10% of $527800) 369460 52780 422240 April sales (20%,70%,10%) 170560 596960 85280 852800 May Sales 261560 915460 1177020 June sales 131560 131560 Total A 574600 911300 1132300 2618200 Accounts Receivable May 1307800*.1+June 657800*.8= 657020 Note 2 Purcahse Budget April May June Total July Units to be sold 65600 100600 50600 216800 30600 Closing Inventory 40% of next month sales S*.4 40240 20240 12240 12240 Total Finised Googd 105840 120840 62840 229040 Less: Beginning Inventory 26240 40240 20240 26240 Units to be produced 79600 80600 42600 202800 Purchase Price 4.3 4.3 4.3 4.3 Total Purchase price A 342280 346580 183180 872040 COGS= Units sold*4 282080 432580 217580 932240 Cash Disbursement Schedule From march purchases 103000 103000 From April Purchases 171140 171140 342280 From May Purchases 173290 173290 346580 From June purchases 91590 91590 Total B 274140 344430 264880 883450 Accounts payable as on 30 June 91590 working Cash payments payment of Inventory 274140 344430 264880 883450 Sales Commissions @ 4% 34112 52312 26312 112736 Advertising 230000 230000 230000 690000 Rent 21000 21000 21000 63000 Salaries 112000 112000 112000 336000 Utilities 8500 8500 8500 25500 Dividend Paid 17250 17250 Equipment purchased 17500 43000 60500 April May J June Total Beginning Cash balance 77000 $53,598 $179,156 77000 Cash receipt 574600 911300 1132300 2618200 Total cash available 651600 964898 1311456 2695200 Less: Cash Disbursements payment of Inventory 274140 344430 264880 883450 Sales Commissions @ 4% 34112 52312 26312 112736 Advertising 230000 230000 230000 690000 Rent 21000 21000 21000 63000 Salaries 112000 112000 112000 336000 Utilities 8500 8500 8500 25500 Dividend Paid 17250 0 0 17250 Equipment purchased 0 17500 43000 60500 Total cash Disbursements $697,002 $785,742 $705,692 $2,188,436 Excess /(deficiency) of cash receipts over cash disbursements ($45,402) $179,156 $605,764 $506,764 Minimum Cash balance (working) 53000 53000 53000 53000 Cash balnce Available (working) ($98,402) $126,156 $552,764 Financing Borrowed 99000 $99,000 Repaid -99000 ($99,000) Interest Repaid -2970 ($2,970) Total financing 99000 0 -101970 -2970 Cash Balance $598 $126,156 $450,794 $99,000 Ending Cash balance $53,598 $179,156 $503,794 $503,794 Dear student the month wise income staement is for your understanding Income Statement as on 3o June 2016 April May June Total Sales 852800 1307800 657800 2818400 2818400 Less: variable Cost Cost of Good Sold 282080 432580 217580 932240 Sales Commissions @ 4% 34112 52312 26312 112736 Contribution 536608 822908 413908 1773424 Fixed Expenses Advertising 230000 230000 230000 690000 Salaries 21000 21000 21000 63000 Utilities 112000 112000 112000 336000 Rent 8500 8500 8500 25500 Insurance 3300 3300 3300 9900 Depreciation 17000 17000 17000 51000 total fixed expenses 391800 391800 391800 1175400 Operating Income 144808 431108 22108 598024 Interest On Short Term Loan 990 990 990 2970 Net Income 143818 430118 21118 595054 ans 3 Income statement For the three months period Sales 2818400 Less: variable Cost Cost of Good Sold 932240 Sales Commissions @ 4% 112736 Total variable expenses 1044976 Contribution 1773424 Fixed Expenses Advertising 690000 Salaries 63000 Utilities 336000 Rent 25500 Insurance 9900 Depreciation 51000 total fixed expenses 1175400 Operating Income 598024 Interest On Short Term Loan -2970 Net Income 595054 Net Income Statement of Retained earnings Opening balance 668902 Add: Net Income for the year 595054 Less: Dividend payable -17250 Balance June 30 1246706 BalANCE Sheet as on 30 June Assets Cash 503794 Accounts Receivable 657020 Inventory 52632 Prepaid Insurance=(22500-9900) 12600 Property & Equipment 1040500 Less: Accumulated Depreciation -51000 2215546 Liabilities & Stockholder equity Accounts payable 91590 Dividend Payable 17250 Total Laibilities 108840 Stockholder Equity Common Stock 860000 Retained earnings 1246706 Total Stockholder Equity 2106706 TotalLiabilities & Stockholder Equity 2215546