Following is selected information relating to the operations of Shilow Company, a wholesale distributor Current assets as of March 31 Cash $ 41,000 Accounts receivable 52,000 Inventory 93,600 Plant and equipment, net 229,000 Accounts payable 77,600 Capital shares 310,000 Retained earnings 28,000 Gross margin is 25 of sales Actual and budgeted sales data are as follows March (actual) $ 130,000 April 156,000 May 168,000 June 186,000 July 128,000 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 At the end of each month, inventory is to be on hand equal to 80 of the following months sales needs, stated at cost One half of a months inventory purchases are paid for in the month of purchase the other half are paid for in the following month The accounts payable at March 31 are a result of March purchases of inventory Monthly expenses are as follows salaries and wages, 12 of sales rent, $9,000 per month other expenses (excluding depreciation), 6 of sales Assume that these expenses are paid monthly Depreciation is $2,500 per month (includes depreciation on new assets) Equipment costing $3,100 will be purchased for cash in April The company must maintain a minimum cash balance of $10,000 An open line of credit is available at a local bank All borrowing is done at the beginning of a month, and all repayments are made at the end of a month borrowing must be in multiples of $1,000 The annual interest rate is 12 Interest is paid only at the time of repayment of principal figure interest on whole months (1 12, 2 12, and so forth) Required Using the preceding data 1 Prepare a schedule of expected cash collections 2 Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases 3 Prepare a schedule of expected cash disbursements for operating expenses 4 Prepare a cash budget by month and for the quarter in total (Any Repayments and Interest should be indicated by a minus sign ) 5 Prepare an income statement for the quarter ended June 30 6 Prepare a balance sheet as of June 30

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Posted on Jul 03, 2024

Following is selected information relating to the operations of Shilow Company, a wholesale distributor:

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.
At the end of each month, inventory is to be on hand equal to 80% of the following months sales needs, stated at cost.
One-half of a months inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory.
Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $9,000 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $2,500 per month (includes depreciation on new assets).
Equipment costing $3,100 will be purchased for cash in April.
The company must maintain a minimum cash balance of $10,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12, 2/12, and so forth).

Required: Using the preceding data: 1. Prepare a schedule of expected cash collections.

2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases.

3. Prepare a schedule of expected cash disbursements for operating expenses.

4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.)

5. Prepare an income statement for the quarter ended June 30.

6. Prepare a balance sheet as of June 30.