$ 29,000 42,000 Current assets as of March 31: Cash Accounts receivable Inventory Plant and equipment, net Accounts payable Capital shares Retained earnings 75,600 196,000 59,600 260,000 23,000 a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June July $105,000 126,000 138,000 156,000 103,000 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. At the end of each month, inventory is to be on hand equal to 80% of the following month's sales needs, stated at cost. e. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are 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, 12% of sales; rent, $6,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $2,000 per month (includes depreciation on new assets). g. Equipment costing $2,600 will be purchased for cash in April. h. The company must maintain a minimum cash balance of $8,000. 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: Using the preceding data: 1. Prepare a schedule of expected cash collections. SHILOW COMPANY Schedule of Expected Cash Collections April May June Quarter Cash sales Credit sales Total cash collections 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. SHILOW COMPANY Schedule of Inventory Purchases April May June Quarter Total needs Quarter SHILOW COMPANY Schedule of Expected Cash Disbursements for Purchases April May June March purchases April purchases May purchases June purchases Total cash disbursements 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY Schedule of Expected Cash Disbursements for Operating Expenses April May June Quarter Total cash disbursements 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.) SHILOW COMPANY Cash Budget April May June Quarter Total cash available Deduct: Disbursements Total disbursements Excess (deficiency) of cash Financing Total financing 5. Prepare an income statement for the quarter ended June 30. SHILOW COMPANY Income Statement For the Quarter Ended June 30 Deduct: Cost of goods sold Goods available for sale Deduct: Operating expenses: 6. Prepare a balance sheet as of June 30. SHILOW COMPANY Balance Sheet as of June 30 Assets Current assets: Total current assets Total assets Liabilities and Shareholders' Equity Current liabilities: Stockholders' equity: Total shareholders' equity Total liabilities and shareholders' equity