$8,000 $20,000 $36.000 The key information and instructions related to the project is listed below: The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory. Building and equipment, net. Accounts payable Common stock Retained eamings a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May $120,000 $21,750 $150,000 $12,250 $50,000 $60,000 $72,000 June $90,000 $48,000 July 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, $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. Using the data provided above, use the Excel Template provided to prepare the following budget schedules: 1. Sales Budget (Merely enter the sales data provided.) 2. Schedule of Expected Cash Collections 3. Merchandise Purchases Budget 4. Schedule of Expected Cash Disbursements - Merchandise Purchases 5. Schedule of Expected Cash Disbursements - Selling and Administrative Expenses 6. Cash Budget Managerial Accounting - Course Project Budgeted Sales March April May June July Quarter Schedule of Expected Cash Collections April May June Cash Sales $ 36,000 Credit Sales 20,000 Total Collections $ 56,000 June Quarter Merchandise Purchases Budget April May Budgeted Cost of Goods Solc $ 45,000 add: Desired Ending Invento 43,200 Total Needs 88,200 less: Beginning Inventory 36,000 Required Purchases $ 52,200 Schedule of Expected Cash Disbursements - Merchandise Purchaes April May June Quarter March Purchases $ 21,750 $ 21,750 April Purchases 26,100 26,100 52,200 $ 21,750 26,100 $ 21,750 52,200 26.100 March Purchases April Purchases May Purchases June Purchases Total Disbursements $ 47,850 Schedule of Expected Cash Disbursements - Selling & Administrative April May June Quarter Commissions $ 7,200 Rent 2,500 Other Expenses 3,600 Total Disbursements $ 13,300 May June Quarter Cash Balance Beginning Add: Cash Collections Total Cash Available Cash Budget April $ 8,000 56,000 64,000 Less Cash Disbursements For Inventory For Expenses For Equipment Total Cash Disbursements Excess (deficiency) of Cash Borrowing Repayments Interest Paid Ending Cash Balance 47,850 13,300 1,500 62,650 1,350
