Following is selected information relating to the operations of Shllow Company, a wholesale distributor 2 25 Doint Current assets of March 111 Cash Accounts receivable Inventory plant and equipment, net Accounts payable Capital shares Retained earnings 5.45,000 56,000 100.000 243,000 14,50 330,000 30.000 a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June July $140,000 168,000 180,000 190.000 138.000 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. 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 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, $10,000 per months, other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $2,700 per month (includes depreciation on new assets) g. Equipment costing $3,300 will be purchased for cash in April h. The company must maintain a minimum cash balance of $11,000. 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. 2 Required: Using the preceding data: 1. Prepare a schedule of expected cash collections SHILOW COMPANY Schedule of Expected Cash Collections April May June Quarter 25 points Cash sales Credit salos Total cash collections os $ 0 $ D 0 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. SHILOW COMPANY Schedule of Inventory Purchases April May June Quarter Total needs 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 S 0 $ 0 $ 0 25 points S 0 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY Schedule of Expected Cash Disbursements for Operating Expenses May June Quarter April 0 $ 0 $ 0 $ 0 $ Total cash disbursements 2 4. Prepare a cash budget by month and for the quarter in total (Any "Repayments" and "Interest" should be indicated by minus sign.) SHILOW COMPANY Cash Budget Apna May June Quarter D 0 0 0 Total cash available Doduct Desbursements 0 0 Total disbursements Excess (deficiency of cash Financing 0 0 0 Total financing 2 5. Prepare an Income statement for the quarter ended June 30. SHILOW COMPANY Income Statement For the Quarter Ended June 30 s Deduct Cost of goods sold: 0 Goods available for sale 0 Deduct Operating expenses: 0 6. Prepare a balance sheet as of June 30. 2 SHILOW COMPANY Balance Sheet as of June 30 Assets ts Current assets Total current assets 0 Total assets Liabilities and Shareholders' Equity Current liabilities Stockholders' equity 0 0 Total shareholders' equity Total liabilities and shareholders' equity