Problem 8-29 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, L08-10] The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31i $ 9,300 27,200 S 50,400 102,000 S 30,300 150,000 $8,600 Cash Aecounts receivable Inventory Building and equipment, net ts payable Common stock The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May S 68,000 $ 84,000 S 89,000 $ 114,000 $ 65,000 July 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 f. Monthly expenses are as follows: commissions, 12% of sales; rent, $4100 per month; other expenses (excluding depreciation), 6% of g. Equipment costing $3,300 will be purchased for cash in April. accounts payable at March 31 are the result of March purchases of inventory sales. Assume that these expenses are paid monthly. Depreclation is $765 per month (includes depreciation on new assets). 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 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 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 1Required 2Required 3 Required 4Required 5 Complete the schedule of expected cash collections Schedule of Expected Cash Collections April $50,400 53,40068,400 May une Quarter Cash sales Credit sales Total collections 172,200 27,20033,600 35,60096,400 $77,600 $ 87,000 104,000 268,600 Required 1Required 2Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements fo Merchandise Purchases Budget AprilMay 600066,750 53,400 68,400 116,400 135,150 124,500 50,400 53,400 June Quarter Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Required purchases Budgeted cost of goods sold for April $84,000 sales x 75% $63,000 Add desired ending inventory for April $66,750 80%-$53,400 $ 85,500 215,250 160,800 376,050 172,200 39,000 68,400 81.750S 56,100 203,850 Schedule of Expected Cash Disbursements-Merchandise Purchases Apri May $30,300 June Quarter March purchases April purchases May purchases June purchases Total disbursements $ 30,300 66,000 81,750 28,050 $ 68,925 $ 206,100 33,000 33,000 40,875 40,875 28,050 S63,30073,875 Required 1 Required 2 Required 3Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign Shilow Company Cash Budget May June Quarter Beginning cash balance Add collections from customers Total cash available Less cash disbursements $ 9,300 77,600 86,900 0 For inventory 63,300 19,220 3,300 85,820 1,080 For expenses For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Total financing Ending cash balance S 1,080S . Complete the schedule of expected cash collections. 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandi 3. Complete the cash budget. 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 Total assets Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity