Following is selected information relating to the operations of Shilow Company, a wholesale distributor 2 Current assets as of March 311 Cash Accounts receivable Inventory Plant and equipment, net Accounts payable Capital shares Retained earnings 25 points $ 25,000 38.000 68.400 162,000 52,400 240,000 21,000 a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June July 5.95,000 114,000 126,000 144,000 93,000 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. d. At the end of each month, Inventory is to be on hand equal to 80% of the following month's sales needs, stated at cost e. One-half of a month's inventory purchases are paid for in the month of purchase the other half are paid for in the following months The accounts payable at March 31 are a result of March purchases of inventory 1 Monthly expenses are as follows: salaries and wages, 12% of sales rent, $5,500 per month other expenses (excluding depreciation, 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1,000 per month (includes depreciation on new assets) g Equipment costing $2.400 will be purchased for cash in April. The company must maintain a minimum cash balance of $8,000. 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 1. Prepare a schedule of expected cash collections. SHILOW COMPANY Schedule of Expected Cash Collections April May June Quarter 68,400 $ 75,600 $ 86,400 $ 230,400 38,000 45,600 50,400 134,000 $ 106,400 $ 121,200 $ 136,800 364,400 Cash sales Credit sales Total cash collections 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. Budgeted cost of goods sold Add: Desired ending inventory Total needs Deduct: Beginning inventory Required inventory purchases SHILOW COMPANY Schedule of Inventory Purchases April May June Quarter 27.8201 $ 29,980s 33.220 91,020 100,800 115.2001 74.400 74,400 128.620 145,180 107.620 165,420 68,400 100,000 115,200 68,400 $ 50,2207 44,3805 (7.5603 97020 2 Quarter SHILOW COMPANY Schedule of Expected Cash Disbursements for Purchases April May June March purchases April purchases May purchases June purchases Total cash disbursements $ 0 $ 0 $ 25 points $ 0 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY Schedule of Expected Cash Disbursements for Operating Expenses April May June Quarter Total cash disbursements $ 0 $ 0 $ 0 $ 0 2 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.) SHILOW COMPANY Cash Budget April May June Quarter 0 0 0 0 Total cash avalable Deduct: Disbursements: 0 0 0 0 Total disbursements Excess (deficiency) of cash Financing Total financing 0 0 0 0 2 SHILOW COMPANY Income Statement For the Quarter Ended June 30 Sales Deduct: Cost of goods sold: 5 pints Goods available for sale 0 0 Deduct: Operating expenses: 0 SHILOW COMPANY Balance Sheet as of Juno 30 Assets Current assets: Total current assets Total assets Liabilities and Shareholders' Equity Current liabilities: Stockholders' equity: Total shareholders' equity Total liabilities and shareholders' equity 0 0