Chapter 8 Homework i 1 30 points References 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 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 64,000 $ 80,000 $ 85,000 $ 110,000 $ 61,000 $ 8,900 $ $ 25,600 48,000 $ 111,600 $ 28,800 150,000 $ $ 15,300 Required: Using the preceding data: Saved 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, $3,700 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $837 per month (includes depreciation on new assets). g. Equipment costing $2,900 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. 1 Complete the schedule of evnerted cash collections

The following data relate to the operations of Shilow Cornpany, a wholesale distributor of consumer goods: a. The gross margin is 25% of sales: b. Actual and budgeted sales data: c Saies are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts recelvable at March 31 are a result of March credit sales. d. Each month's ending inventory should equal 80 s 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 or March purchases of inventory. (Monthly expenses are as follows: commissions, 12% of sales, rent, $3,700 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $837 per month (includes depreciaton on new assets). 9 Equipment costing $2,900 will be purchased for cash in Apri. 7. Management would like to maintain a minmum 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 begirning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 18 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 occumulated interest at the end of the quarter Required: Using the preceding data: b. Actual and budgeted sales data. C. Sales are 60% for cash and 40% on credit Credit sales ate collected in the month following sale. The accounts receivable at March at are a fesult of March credit sales. e One tralf of a month's imentory purchases is paid for in the month of purchase the other half is palad for in the following month. The accounts poyable at March 3rare the result of March purchases of inventory. 1. Monthy expenses are as follows commissions, 12% of sales; rent, 53,700 per month; other expenses (exciuding depreciation), 6%. of sales. Assume that these expenses are paid monthy. Depreclation is $837 per month (includes depreciation on new assets) hi Managemert would like to maintain a minimum cash balance of at lieast 54,000 at the end of each month. The company has an. agrecment wah a local bank that allows the compary to barrow in inctements of 51,000 at the beginning of each month, up to a total loan batance of $20.000. The interest rate on these loans is th per month and for simplicity we wil assurme that interest is not compounded. The company would, as tar as it is able, repay the loan plus accumulated interest at the end of the quarter. Required: Using the prececding data 1 Complete the scheduie of expected cash collections. 2. Complete the merchandite purchases budget and the schedule of expected cash disbursements for merchandise purchases: 3. Complete the cash budpet. 4 Preparc an abrorption costing income statement for the quarter ended June 30 5 Prepare a balance shent as of June 30 . Complete this question by entering your answers in the tobs below. Complete the schedife of expected cash collections