Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 8 . 2 9 ( Algo ) Completing a Master Budget [ L 0 8 - 2 , L 0 8 - 4 ,
Problem Algo Completing a Master Budget L L LO LO LO LO
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:
a The gross margin Is of sales.
b Actual and budgeted sales data:
c Sales are for cash and on credit. Credit sales are collected in the month following sale. The accounts recelvable at March
are a result of March credit sales.
d Each month's ending Inventory should equal of the following month's budgeted cost of goods sold.
e Onehalf of a month's inventory purchases is paild for In the month of purchase; the other half is paid for in the following month. The
accounts payable at March are the result of March purchases of Inventory.
f Monthly expenses are as follows: commlssions, of sales; rent, $ per month; other expenses excluding depreclation of
sales. Assume these expenses are pald monthly. Depreclation is $ per month Includes depreclatlon on new assets
g Equipment costing $ will be purchased for cash in April.
h Management would like to maintain a minimum cash balance of at least $ at the end of each month. The company has an
agreement with a local bank allowing It to borrow In Increments of $ at the beginning of each month, up to a total loan balance
of $ The Interest rate on these loans is per month and, for simplicity, we will assume 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.
Required:
Using the preceding data:
Complete the schedule of expected cash collections.
Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.
Complete the cash budget.
Prepare an absorptlon costing Income statement for the quarter ended June
Prepare a balance sheet as of June
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started