Please just correct my work (wrong andwers are red). thanks!
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 $ 8,888 $ 20,888 $ 36,000 $ 120,00 $ 21,250 $ 150,000 $ 12,25e a. The gross margin is 25% of sales. b. Actual and budgeted sales data. March (actual) Apr 11 May June July 558.ee $69.ee $72.000 $99, eae 548,888 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. Using the data above: 1. Complete the following schedule. Answer is complete and correct. Schedule of Expected Cash Collections April May Cash sales $ 36.000 $ 43,200 $ 54,000 Quarter $ 133,200 72.800 $ 206.000 Credit sales 20.000 24,000 28.800 Total collections $ 58,000 S 67,200 S 82.800 2. Complete the following: Answer is complete and correct. Merchandise Purchases Budget April May June Quarter Budgeted cost of goods is $ 45.000 $ 54.000 S 67.500 sold 166.500 Add desired ending inventory 43.200 54.000 28.800 28.800 Total needs 88.200 108.000 96.300 195.300 Less beginning inventory 38.000 43,200 54.000 36.000 $ Required purchases S 52 200 $ 84.800 IS 42.300 159.300 3. Complete the following cash budget: (Cash deficiency, repayments and Interest should be indicated by a minus sign.) Answer is complete but not entirely correct. Shilow Company Cash Budget April May 8,000 $ 4.350 XS 58.000 67,200 64,000 71,550 June Quarter 4,500 $ 8.000 S > 82.800 Beginning cash balance Add cash collections Total cash available Less cash disbursements 200.000 214.000 87.300 47,850 58.500 15,400 53.550 18.700 150.900 47.480 13,300 1,500 62.650 1.350 73.960 (2.410) 72.250 15.140 1,500 208.880 5,140 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Ending cash balance 3.000 3 7.000 (10.000) (300) 5 (10.300) 4.840 $ 10.000 x (10.000) (300) X (300) 4.840 3.000 4.350 7.000 4.590 $ S 3 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 $ 36,000 159,300 195.300 (28.800) Goods available for sale 166,500 55.500 Ending inventory Gross margin Selling and administrative expenses: Commissions 26,840 7.500 Rent DO Depreciation 2.700 (300) X 13,320 Interest expense Other expenses Net operating income Interest expense 49,860 6,640 (800 Net income 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 SIS 4,840 36.000 28.800 Inventory 89.640 Total current assets Building and equipment-net 118.800 S 188.440 Total assets Liabilities and Stockholders Equity Account payable is 21.150 Stockholders' equity: Common stock 150,000 Retained earnings 17.290 % 107 290 3188 440 Total abilities are stockholders eget
