FYI .. Please find 3-5 answer

Problem 8-27 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10] The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods Current assets as of March 31 $ 7,300 $ 19,200 $ 38,400 $124,800 $ 22,800 $ 150,000 $ 16,900 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Capital stock Retained earnings a. The gross margin is 25% of sales b. Actual and budgeted sales data March (actual) April May June July $48,000 64,000 69,000 S94,000 545,000 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. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold e. One-half of a 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 of inventory Monthly expenses are as follows: commissions, 12% of sales: rent, $2,100 per month. Other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is 5936 per month (includes depreciation on new assets). f. g. Equipment costing $1,300 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 $20,000. The interest rate on these loans is 1% 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 of the quarter 3. Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget April June Quarter Beginning cash balance Add cash collections Total cash available Less cash disbursements: 7,300 57,600 64,900 For inventory For expenses For equipment 48,300 13,620 1,300 63,220 1,680 Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Ending cash balance 1,680 S 0 5 4. Prepare 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: 5. 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 Required Using the data above 1. Complete the following schedule. Schedule of Expected Cash Collections April S 38,400 May June Quarter Cash sales Credit sales Total collections 19,200 S 57,600S D S 2. Complete the following: Merchandise Purchases Budget April 48,000 May June Quarter Budgeted cost of goods sold Add desired ending inventory Total needs Less be Required purchases 41,400 89,400 38,400 51,000 S ginning inventory 0 5 Budgeted cost of goods sold for April Add desired ending inventory for April $64,000 sales x 75%-$48,000 $51,750 x 80% $41.400 Schedule of Expected Cash Disbursements-Merchandise Purchases April S 22,800 May June Quarter March purchases April purchases May purchases June purchases Total disbursements S 22,800 25,500 25,500 51,000 S 48,300 S 25,500S 0 73,800