Complete Calculate the expect and in total for next year. 4 Prepare a cash budget by quarter and in total for next year. PROBLEM 8-29 Completing a Master Budget LO8-2, LO8-4, LOB-7. LO8-B, The following data relate to the operations of Shilow Company, a wholest consumer goods: Merchand Budgeted Add desi Total nec Less bec Requires "For Ap $54,00 Current assets as of March 31 Cash ............ Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings $8.000 $20,000 $36.000 $120,000 $21.750 $150.000 $12.250 Sched a. b. The gross margin is 25% of sales. Actual and budgeted sales data: March April May June Total March (actual) April May June July $50,000 $60,000 $72,000 $90,000 $48.000 3 Cor Cas c. Add d Tot goods sold. e. Les MP f To Sales are 60% for cash and 40% on credit. Credit sales are collected in the month a sale. The accounts receivable at March 31 are a result of March credit sales Each month's ending inventory should equal 80% of the following month's budgledat is paid for in the following month. The accounts payable at March 31 are the of March purchases of inventory. Monthly expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid my cxpenses are as follows: commissions, 12% of sales; rent, $2,500 per month, Depreciation is $900 per month (includes depreciation on new assets). & Equipment costing $1,500 will be purchased for cash in April. Management would like to maintain a minimum cash balance of at least 54,000 miles of each month. The company has an agreement with a local bank that allows the compare borrow in increments of $1,000 at the beginning of each month, up to a total loan balist $20,000. The interest rate on these loans is 1% per month and for simplicity we will som that interest is not compounded. The company would, as far as it is able, repay the len po accumulated interest at the end of the quarter. Required: Using the preceding data: 1. Complete the following schedule: EX Fi E h. 4. 5. PRO LO8 Milo thir a. Schedule of Expected Cash Collections April May June Quat Cash sales .... Credit sales ... Total collections $36.000 20,000 $56,000 2. Complete the following: Master Budgeting 399 May June Quarter Merchandise Purchases Budget April Budgeted cost of goods sold ....... $45,000 Add desired ending inventory $54,000 43,200 Total needs - 88,200 Less beginning inventory 36,000 Required purchases .......... $52,200 "For April sales: $60,000 sales x 75% cost ratio = $45,000. +$54.000 x 80% = $43,200 Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter $21,750 26.100 March purchases April purchases May purchases June purchases Total disbursements $26,100 $21.750 52,200 $47,850 3. Complete the following cash budget: Cash Budget April May June Quarter . $8,000 56,000 64.000 Beginning cash balance Add cash collections Total cash available Less cash disbursements: For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash Financing: Etc. 47,850 13,300 1,500 62,650 1,350 4. Using Schedule 9 as your guide, prepare an absorption costing income statement for the quarter ended June 30. 5. Prepare a balance sheet as of June 30. PRO tho Sales Production, and Direct Materials Budgets L08-2, L08-3
