I need help getting started on each of the five questions under the "required" section. I need to also understand the "why". Thanks in advance for your help on this.
AutoSave . Off) Assignment tutor question - Saved to this PC Delia Watkins DW X File Home Insert Design Layout References Mailings Review View Help Search Share Comments PROBLEM 9-27 Completing a Master Budget [L09-2, LOS-4, L09-7. LOO-8, LOO-9, LO9-10] The following data relate to the operations of Shilow Company, a wholesale distributor of con- sumer goods: Current assets as of March 31: Call . ..... $8.000 Accounts receivable. $20.000 Inventory. $36,000 Buildings and equipment, not. $ 120,000 Accounts payable $21.750 Capital Stock. ... $150,000 Retained earnings $12 250 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual $50,000 April .. $60,000 May .. ... $72,000 June. $90,000 July $48,000 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. c. 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.$00 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets). E- Equipment costing $1,500 will be purchased for cash in April. 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. Page 1 of 2 0 words + 90%Assignment tutor question - Saved to this PC DW X AutoSave . Off) Delia Watkins File Home Insert Design Layout References Mailings Review View Help Search Share Comments Using the proceding delas 1. Complete the following schedule: Schodula of Expoclod Cash Collections April May June Quarter Cash sales ............ $36,000 Croat Sikes.........." 20,000 Total collections. ...... $56,000 2. Complete the following: Merchandise Purchases Budget April May June Quarter Budgeted coat of goods sold ......... $45,000' $54,000 Add desired ending Inventory... .... ... 43,200 Total needs. .... .... ... ..... .." 88,200 Loss boginning inventory.. 36,000 Required purchases .. $57,200 "For April sales: $60.000 solos x 751 cost ratio - $45,000. 354000 x 80% - 143200 Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases.weassesssawazramamas $21.750 $71.750 36.100 $26,10 57,200 May purchases.. June purchases....... Total disbursements .... $47 850 Complete the following cash hadget Cash Budget Ap May June Quarter Bogring cash balance.....areasrama $4000 Add cach colodion.. . . $6.000 Total cash available .. . ... $4,000 Less cash disbursements For Eventory 47.850 For expornes....... 13 300 For equipment ........ 1 500 Total Girsh disbursements.. 6.650 Excess (policiency of cash. .. 1.350 Financing Ebc. 1. Prepare an sinception conting income staleme al, similar to the one shown in Schedule 9 in the chapter, for the quarter ended Jame 30. Prepare a balance sheet as of June 30. + 90% Page 2 of 2 0 words
