Problem 8-29 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

Current assets as of March 31:

Cash $ 7,800

Accounts receivable $ 21,200

Inventory $ 41,400

Building and equipment, net $ 130,800

Accounts payable $ 24,675

Common stock $ 150,000

Retained earnings $ 26,525

The gross margin is 25% of sales.

Actual and budgeted sales data:

March (actual) $ 53,000 April $ 69,000 May $ 74,000 June $ 99,000 July $ 50,000

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 a result of March credit sales. Each months ending inventory should equal 80% of the following months budgeted cost of goods sold.

One-half of a months 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.

Monthly expenses are as follows: commissions, 12% of sales;

rent, $2,600 per month;

other expenses (excluding depreciation), 6% of sales.

Assume that these expenses are paid monthly. Depreciation is $981 per month (includes depreciation on new assets). Equipment costing $1,800 will be purchased for cash in April. 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 in increments of $1,000 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.

Required: Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

*****************I need parts 3, 4, 5 completed WITH FORMULAS and explanation please!!!!!

Shilow Company
Cash Budget
	April	May	June	Quarter
Beginning cash balance	$7,800
Add collections from customers	62,600
Total cash available	70,400	0	0	0
Less cash disbursements:
For inventory	52,050
For expenses	15,020
For equipment	1,800
Total cash disbursements	68,870	0	0	0
Excess (deficiency) of cash available over disbursements	1,530	0	0	0
Financing:
Borrowings
Repayments
Interest
Total financing	0	0	0	0
Ending cash balance	$1,530	$0	$0	$0

• Prepare an absorption costing income statement for the quarter ended June 30

• Shilow Company
  Income Statement
  For the Quarter Ended June 30
  Cost of goods sold:
  	0
  		0
  		0
  Selling and administrative expenses:
  		0
  		0
  		$0

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Prepare a balance sheet as of June 30.

Shilow Company
Balance Sheet
June 30
Assets
Current assets:
Total current assets		0
Total assets		$0
Liabilities and Stockholders Equity
Stockholders' equity:
		0
Total liabilities and stockholders equity		$0