Question 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 $16 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) 22,400 28,400 42.400 67.400 102,400 June (budget) July (budget) August (budget) September (budget) 52,480 32,400 30,400 27,400 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 $5 20 for a pair of earrings, One-half of a month's purchases is paid for in the month of purchase the other halt 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: Kalac festning

Solution: Part 1(a)         Sales Budget           April May June Quarter Total Budgeted Unit Sales 67,400 102,400 52,400 222,200 Selling price per unit $16 $16 $16 $16 Budgeted Sales Revenue $1,078,400 $1,638,400 $838,400 $3,555,200           Part 1(b)         Schedule of Expected Cash Collection   April May June Quarter Total February Sales (28,400 Units @ $16) (10% Collection in April)  $45,440       March Sales (42,400 Units @ $16 = $678,400) (70% Collection in April and 10% Collection in May) $474,880 $67,840     April Credit Sales (20% in April; 70% in May & 10% in June) $215,680 $754,880 $107,840   May Sales (20% in May and 70% in June)   $327,680 $1,146,880   June Sales (20% in June)     $167,680   Total Expected Cash Collections $736,000 $1,150,400 $1,422,400 $3,308,800           Part 1-c         Merchandise Purchase Budget           April May June Quarter Budgeted Unit Sales 67,400 102,400 52,400   Add: Desired Ending Inventory (40% of next month's unit sold) 40,960 20,960 12,960   Total needs 108,360 123,360 65,360   Less: Estimated Beginning Inventory (Ending Inventory of Last Month) 26,960 40,960 20,960   Required Purchases in units 81,400 82,400 44,400 208,200 Multiply by: Cost per pound $5.20 $5.20 $5.20 $5.20 Required Merchandise purchases in dollars $423,280 $428,480 $230,880 $1,082,640 Note - June Ending Inventory = July Sales 32,400 Units * 40% = 12,960         Note - April Beginning Inventory = April Sales 67,400*40% = 26,960                   Part 1d         Schedule of Budgeted / Expected Cash Disbursements for Merchandise Purchases   April May June Quarter Accounts Payable, Beginning $112,000       April Purchases (1/2 paid in April and 1/2 May) $211,640 $211,640     May Purchases (1/2 Paid in May & 1/2 in June)   $214,240 $214,240   June Purchases (1/2 Paid in June)     $115,440   Total Expected Cash disbursements $211,640 $425,880 $329,680 $967,200   Hope the above calculations, working and explanations are clear to you and help you to understand the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAPu2026thank you As per guidelines, first 4 parts are compolsary to answer. Request you to please ask separate question for other parts of this problems   ...