3:36 8 F Quize-CMA . . . The following data relate to the operations of Shilow Company. a wholesale distributor of con- sumer goods: Current assets as of March 31: Cash . . . . . . . ..... .. . . .. . ... ..... $8,000 Accounts receivable . . . . .... .. . $20,000 Inventory . .. $36,000 Building and equipment, net . . . . . . . + + $120,000 Accounts payable $21.750 Common stock $150,000 Retained earnings ..... . . $12,250 The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) $50,000 April . $60,000 May . ....+ $72,000 June ..... $90,000 July . . $48,000 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. C. 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, $2.500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly, Depreciation is $900 per month (includes depreciation on new assets), g- Equipment costing $1,500 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 Required 1. Schedule of expected cash collection 2. Budgeted merchandise purchase 3. Cash budget 4. Budgeted income statement 5. Budgeted balance sheet Q#2 You have just been hired as a new management trainee by Earrings Unlimited, a distributor of ear- rings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare comp ets for the upcoming second quarter in order to show management the benefits that c an integrated budgeting program, To this end, you have worked with accounting . to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price-$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow