Master Budget: Shilow Company

The key information and instructions related to the project is listed below:

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

A. The gross margin is 25% of sales. B. Actual and budgeted sales data:

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. F. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500 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). G. Equipment costing $1,500 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.

Using the data provided above, use the Excel Template provided to prepare the following budget schedules:

1. Sales Budget (Merely enter the sales data provided.)
2. Schedule of Expected Cash Collections
3. Merchandise Purchases Budget
4. Schedule of Expected Cash Disbursements - Merchandise Purchases
5. Schedule of Expected Cash Disbursements - Selling and Administrative Expenses
6. Cash Budget

1. Please note that Excel formulas or functions should be used throughout the budget wherever possible, instead of entering numbers into each cell.

Managerial Accounting - Course ProjectBudgeted SalesMarchAprilMayJuneJuly Schedule of Expected Cash Collections AprilMay June QuarterCash Sales$ 36,000 Credit Sales20,000 Total Collections$ 56,000 Merchandise Purchases Budget AprilMayJuneQuarterBudgeted Cost of Goods Sold$ 45,000 add: Desired Ending Inventory43,200 Total Needs88,200 less: Beginning Inventory36,000 Required Purchases$ 52,200 Schedule of Expected Cash Disbursements - Merchandise Purchaes AprilMayJuneQuarterMarch Purchases$ 21,750 $ 21,750 April Purchases26,100 26,100 52,200 May Purchases June Purchases Total Disbursements$ 47,850 Schedule of Expected Cash Disbursements - Selling & Administrative AprilMayJuneQuarterCommissions$ 7,200 Rent2,500 Other Expenses3,600 Total Disbursements$ 13,300 Cash Budget AprilMayJuneQuarterCash Balance Beginning$ 8,000 Add: Cash Collections56,000 Total Cash Available64,000 Less Cash Disbursements For Inventory47,850 For Expenses13,300 For Equipment1,500 Total Cash Disbursements62,650 Excess (deficiency) of Cash1,350 Borrowing Repayments Interest Paid Ending Cash Balance