1 The following data relate to the operations of Dillinger Company, a wholesale distributor of consumer goods: Current assets as of March 31: 10,000 100 ponts Cash 25,800 Accounts receivable $ Skipped 16,660 Inventory $ 250,000 Buildings and equipment (net) S 47,500 Accounts payable $ 51,000 Capital stock $ 203,960 Retained earnings $ a. Gross margin is 30% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 86,000 $ 119,000 $127,000 $ 141,000 $60,000 c. Sales are 70% for cash and 30% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. e. 25% of a month's inventory purchases is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory. f. Monthly expenses are as follows: salaries and wages, $23,500; rent, $4,700 per month; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $8,000 per month (includes depreciation on new assets). g. Equipment costing $10,000 will be purchased for cash in April. h. The company must maintain a minimum cash balance of $10,000. 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). Required: Required: Using the above data: 1. Complete the following schedule: Dillinger Company Schedule of Expected Cash Collections April May June Quarter - Total Cash sales 83,300 $ 88,900 $ 98,700 $ 270,900 Credit sales 35,700 38,100 42,300 116,100 Total collections S 119,000 $ 127,000 $ 141,000 $ 387,000 1 Dillinger Company Merchandise Purchases Budget April May June Quarter - Total Budgeted cost of goods sold $ 83,300 S 88,900 $ 98,700 $ 270,900 Add: desired ending inventory 17,780 19,740 8,400 45,920 100 points Total needs 101,080 108,640 107,100 316,820 Less: beginning inventory 16,660 17,780 19,740 16,660 Skipped Required purchases S 84,420 S 90,860 $ 87,360 $ 300,160 eBook Dillinger Company Schedule of Expected Cash Disbursements-Merchandise Purchases April May March purchases $ 47,500 April purchases 21,105 63,315 June Quarter - Total $ 47,500 84,420 May purchases 22,715 June purchases Total disbursements $ 68,605 $ 86,030 $ 0 $ 131,920 3. Complete the following schedule: Dillinger Company Schedule of Expected Cash Disbursements-Selling and Administrative Expenses April May June Quarter-Total Salaries and wages $ 23,500 Rent 4,700 Other expenses 9,520 Total disbursements $ 37,720 $ 0 $ 0 S 0 4. Complete the following cash budget: (Cash deficiency, repayments and interest should be indicated by a minus sign.) Dillinger Company Cash budget April May June Quarter - Total Cash balance, beginning S 10,000 Add cash collections 109,100 Total cash available 119,100 0 0 0 Less cash disbursements: For inventory 68,605 For expenses 37,720 For equipment 10,000 Total cash disbursements 116,325 0 0 0 Excess (deficiency) of cash 2,775 0 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Cash balance, ending S 2,775 $ 0 $ 0 $ 0 5. Prepare an absorption costing income statement for the quarter ended June 30. Cost of goods sold: Dillinger Company Income Statement For the Quarter Ended June 30 Selling and administrative expenses: 0 0 0 0 0 S 0 6. Prepare a balance sheet as of June 30. Current assets: Total current assets Total assets Current liabilities: Dillinger Company Balance Sheet June 30 Assets Liabilities and Stockholders' Equity Stockholders' equity: 0 $ 0 0 Total liabilities and equity $ 0