please correct all my wrong answers (in red)
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Building and equipment, net Accounts payable Capital stock Retained earnings $ $ $ $ $ $ $ B, 890 20,000 36,000 120,000 21,75e 150,00 12, 250 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $50,000 $60,000 $72,090 $90,000 $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. 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 1. 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 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. 4. Prepare an absorption costing income statement for the quarter ended June 30. Answer is complete but not entirely correct. Shilow Company Income Statement For the Quarter Ended June 30 Sales $ 222.000 Cost of goods sold: Beginning inventory Purchases $ 36,000 159,300 Goods available for sale 195,300 (28.800) 166,500 55,500 Ending inventory Gross margin Selling and administrative expenses: Commissions Rent 26,840 7.500 2,700 OS Depreciation (300) X 13,320 Interest expense Other expenses Net operating income Interest expense 49,860 5.640 Net income (800) 5.340 5. Prepare a balance sheet as of June 30. Answer is complete but not entirely correct. Shilow Company Balance Sheet June 30 Assets Current assets: Cash $ Account receivable 4,840 36.000 28.800 Inventory Total current assets 89.840 Building and equipment-net 118.800 S188.440 Total assets Liabilities and Stockholders' Equity Account payable is 21.150 Stockholders' equity: Common stock 150,000 Retained earnings 17.200 X 187.290 3188 440 Total abilities are stockholders equity
