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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, $4,000 per month; other expenses (excluding depreciation). 6% of sales. Assume that these expenses are paid monthly Depreciation is $783 per month (includes depreciation on new assets). g. Equipment costing $3,200 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. Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Shitow Company Cash Budget April May $ 9,200 76,600 June Quarter Beginning cash balance Add collections from customers Total cash available 85,800 Less cash disbursements: 62.550 18,940 3.200 84.690 1.110 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance Prepare an absorption costing income statement for the quarter ended June 30. Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses. Selling and administrative expenses. Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets Total current assets Total assets Liabilities and Stockholders' Equity , Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity