Current assets as of March 31: Cash Accounts receivable Inventory Building and equipment, net ccounts 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 9 59,999 9 25,999 9 99,999 9 195,999 9 59,999 9 9,499 9 23,999 9 45,999 9 123,999 9 29,925 9 159,999 9 23,995 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% ofthe following month's budgeted cost of goods sold. e. lOne-half ofa 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 ofinyentory. 1'. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,200 per month; other expenses {excluding depreciation}, 6% of sales. Assume that these expenses are paid monthly. Depreciation is $927 per month {includes depreciation on new assets). g. Equipment costing $2.400 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 $20000. The interest rate on these loans is '36 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 otthe quarter. 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. 4. Prepare an absorption costing income statement for the quarter ended June 30. 5. Prepare a balance sheet as ofJune 30. Complete the schedule of expected cash collections. Schedule of Expected Cash Collections April May June Quarter Cash sales $ 45,000 Credit sales 23,600 Total collections $ 68.600Complete 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 56,250 $ 60,000 Add desired ending merchandise inventory 48,000 Total needs 104.250 Less beginning merchandise inventory 45,000 Required purchases $ 59,250 Budgeted cost of goods sold for April = $75,000 sales x 75% = $56,250. Add desired ending inventory for April = $60,000 * 80% = $48,000. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases 69 26,925 $ 26,925 April purchases 29,625 29,625 59,250 May purchases June purchases Total disbursementsComplete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget April May June Quarter Beginning cash balance $ 8,400 Add collections from customers 68,600 Total cash available 77,000 Less cash disbursements: For inventory 56,550 For expenses 16,700 For equipment 2,400 Total cash disbursements 75,650 Excess (deficiency) of cash available over disbursements 1,350 Financing: Borrowings Repayments Interest Total financing Ending cash balancePrepare an absorption costing income statement for the quarter ended June 30. Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses:Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity