0 The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31:1 Cash Accounts receivable. Inventory Building and equipment, net Accounts payable Common stock Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data: $ 7,900 $ 21,600 $ 42,000 $132,000 $ 25,050 $ 150,000 $ 28,450 March (actual) April May June July $ 54,000 $ 70,000 $ 75,000 $ 100,000 $51,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows: commissions, 12% of sales; rent. $2,700 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $990 per month (includes depreciation on new assets). g. Equipment costing $1,900 will be purchased for cash in April. h. Management would like to maintain a minimum cash balance of at least $4.000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. Cash sales Credit sales Total collections Schedule of Expected Cash Collections April $ 42,000 21,600 $ 63,600 EA May June Quarter $ 0 $ 0 $ 0 Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 52,500 $ 56,250 Add desired ending merchandise inventory 45,000 Total needs 97,500 56,250 0 0 Less beginning merchandise inventory 42,000 Required purchases $ 55,500 $ 56,250 $ 0 0 Budgeted cost of goods sold for April = $70,000 sales x 75% = $52,500. Add desired ending inventory for April = $56,250 x 80% = $45,000. Schedule of Expected Cash Disbursements-Merchandise Purchases March purchases April purchases April May $ 25,050 27,750 27,750 June Quarter $ 25,050 55,500 May purchases June purchases Total disbursements $ 52,800 $ 27,750 $ 0 $ 80,550 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: For inventory For expenses For equipment Shilow Company Cash Budget Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance April May June Quarter $ 7,900 63,600 71,500 0 0 0 52,800 15,300 1,900 70,000 0 0 0 1,500 0 0 0 0 0 0 $ 1,500 $ 0 $ 0 69 0 0 Cost of goods sold: Shilow Company Income Statement For the Quarter Ended June 30 Selling and administrative expenses: 0 0 0 0 0 0 Current assets: Total current assets Total assets Stockholders' equity: Shilow Company Balance Sheet June 30 Assets Liabilities and Stockholders' Equity 0 $ 0 0 Total liabilities and stockholders' equity $ 0