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Problem 8-29 REV (Algo) Completing a Master Budget (LO8-2, L08-4, LO8-7, LO8-8, LO8-9, LO8-10) 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 earnings $ 8,300 $ 23,200 $ 44,400 $ 126,000 $ 26,550 $ 150,000 $ 25,350 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 58,000 $ 74,000 $ 79,000 $ 104,000 $ 55,000 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. 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 1 Monthly expenses are as follows: commissions, 12% of sales: rent. $3,100 per month other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $945 per month (includes depreciation on new assets). 9. Equipment costing $2,300 will be purchased for cash in April h Management would like to maintain a minimum cash balance of at least $4.000 dt 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: Using the preceding data: 1. Complete the schedule of expected cash collections 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases 3. Complete the cash budget Required: Using the preceding data: 1. Complete the schedule of expected cash collections. 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases 3. Complete the cash budget. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the schedule of expected cash collections Schedule of Expected Cash Collections April May June Quarter Cash salos $ 44,400 Credit sales 23,200 Total collections $ 67,600 $ 0 $ 0 $ 0 Required 2 > Required 1 Required 2 Required 3 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases, Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 55,500 $ 59,250 $ 78,000 $ 192,750 Add desired ending merchandise inventory 47.400 102,900 33,000 33,000 Total needs 102,900 162,150 111,000 225,750 Less beginning merchandise inventory 44,400 44,400 62.400 44,400 Required purchases $ 58,500 $ 117,750 $ 48,600 $ 181,350 Budgeted cost of goods sold for April = $74,000 sales * 75% = $55,500 Add desired ending inventory for April - $59,250 80% = $47.400. Schedule of Expected Cash Disbursements---Merchandise Purchases April May June Quarter March purchases $ 26,550 $ 26,550 April purchases 29,250 29,250 58,500 May purchases 37,125 37,125 74,250 June purchases 24,300 24,300 Total disbursements $ 55,800 $ 66,375 $ 61,425 $ 183,600 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a June Quarter Shilow Company Cash Budget April May $ 8,300 67,600 75,900 0 0 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: 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 55,800 16,420 2,300 74,520 0 0 0 1,380 0 0 0 0 0 0 0 $ 1,380 $ 0 $ 0 $ 0