1) Create a CASH BUDGET

2) Create a PURCHASE BUDGET

Following is selected information relating to the operations of Shilow Company, a wholesale distributor Current assets as of March 31 Cash Accounts receivable Inventory Plant and equipment, net Accounts payable Capital shares Retained earnings 43,000 54,000 97,200 236,000 81,200 320,000 29,000 a. Gross margin is 25% of sales b. Actual and budgeted sales data are as follows March (actual) $135,000 162,000 174,000 192,000 133,000 June C. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The d. At the end of each month, inventory is to be on hand equal to 80% of the following month's sales needs e. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid accounts receivable at March 31 are a result of March credit sales stated at cost. for in the following month. The accounts payable at March 31 are a result of March purchases of f. Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $9,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $2,600 per month (includes depreciation on new assets) g. Equipment costing $3,200 will be purchased for cash in April h. The company must maintain a minimum cash balance of $11,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month, borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12, 2/12, and so forth)