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Following is selected information relating to the operations of Shilow Company, a wholesale distributor: Current assets as of March 31: Cash $ 2?,000 Accounts receivable 40,000 Inventory H.000 Plant and equipment. net 109,000 Accounts payable 56,000 Capital shares 250,000 Retained earnings 22,000 a. Gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March {actual} $100,000 April 1 20.000 May 1 32.000 June 150,000 July 00.000 c. Sales are 50% 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 30% of the following month's sales needs, stated at cost. e. One-half ofa 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. f. Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $6,000 per month; other expenses {excluding depreciation}, 6% of sales. Assume that these expenses are paid monthly. Depreciation is 51,900 per month (includes depreciation on new assets). 9. Equipment costing $2,500 will be purchased for cash in April. h. The company must maintain a minimum cash balance of $9,000. An open line of credit is available at a local bank. All borrowing is done at the beginning ofa month, and all repayments are made at the end of a month; borrowing must be in multiples of $1 ,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal; gure interest on whole months W12, 312, and so forth). Required: Using the preceding data: 1. Prepare a schedule of expected cash collections. Required: Using the preceding data: 1. Prepare a schedule ofexpecied clash collections. -- ____ Total cash collections 2. Prepare a schedule ofinventory purchases and 3 schedule of expected cash disbursements for purchases. SHILOW COMPANY Schedule of Expected Cash Disbursements for Purchases April May June Quarter March purchases April purchases May purchases June purchases Total cash disbursements 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY Schedule of Expected Cash Disbursements for Operating Expenses April May June Quarter Total cash disbursements5. Prepare an income statement for the quarter ended June 30. SHILOW COMPANY Income Statement For the Quarter Ended June 30 Deduct: Cost of goods sold: Goods available for sale Deduct: Operating expenses: 6. Prepare a balance sheet as of June 30. SHILOW COMPANYIE. Prepare a balance sheet as of June 30. Current assets: Total current assets Total assets Liabilities and Bhareholders' Equity.r Current liabilities: Stockholders\" equity: Total shareholders\" equity Total liabilities and shareholders\" equity 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign.) SHILOW COMPANY Cash Budget April May June Quarter Total cash available Deduct: Disbursements: Total disbursements Excess (deficiency) of cash Financing: Total financing 5. Prepare an income statement for the quarter ended June 30. SHILOW COMPANY
