operating budgets

ROBLEM9-2 Completing a Master Budget [L021 The ollowing data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: b. C. Current assets as of March 31: Cash. Accounts receivable . Inventory.... ..... ..... ..... ... Buildings and equipment, net Accounts payable Common shares. Retained earnings The gross margin is 25% of sales. Actual and budgeted sales data are as follows: March (actual). April . May . June.... . July ..... ..... $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 $50,000 60,000 72,000 90,000 48,000 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 the result of March credit sales. (Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March pur- chases of inventory. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500; other expenses (exclud- ing depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month and includes depreciation on new assets. ca-(hu CD fhe e) Pycpow& f-ke