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Type text] Use the following information to answer questions 7-10 Lilah and Juliet's Doll Company (L&.J) sells dolls through retail outlets in large malls. L&J is currently in the process of preparing its budget for the quarter ended September 30, 2013. L&J's balance sheet at June 30, 2013 is as follows: $10,000 Cash Accounts Pooeivable Inventory Total Assets 5,000 $25,000 $3,000 15,000 Accounts Payable Capital gock Retained Earnings Total Liabilities and Stodkholder's Equity $25,000 i. L&J sells each doll for $20. i L&J buys each doll for $10. i. Budgeted sales in units are: July August September 5,000 dolls 6,000 dolls 7,000 dolls 40% of all sales are for cash. 60% of all sales are for credit. The Accounts Receivable balance at June 30, 2013 is a result of June credit sales all iv, of which will be collected in July 2013 Cash from credit sales is collected as follows: 60% in the month of sale 40% in the month following sale. vi. At June 30, 2013, L&J has 500 dolls in inventory. Each month's ending inventory in units ( ie, number of dolls) should equal 10% of the next month's budgeted sales in units (ie, number of dolls). Inventory purchases are paid for as follows: 50 % in the month of purchase and 50 % in the following month. The Accounts Payable balance at June 30, 2013 S the result of June inventory purchases, all of which will be paid in July 2013. vii. vili. L&J's monthly sales and administrative expenses payable in cash are expected to be $115,000 and are paid in the month incurred. In addition L & J budgets depreciation expense of $ 10,000 each month. L&J must maintain a minimum cash balance of $10,000 at the end of each month. L&J has an agreement with a local bank that allows the company to borrow any money it needs at the beginning of each month. The interest rate on these loans is 1 % per month and for simplicity is not compounded. L & J would, if it is able, repay any loan plus accumulated interest at the end of the quarter. x

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