Problem 8-29 REV (Algo) 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 Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings $ 8,800 $ 25, 200 $ 47,400 $ 114,000 $ 28,425 $ 150,000 $ 16,975 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 63,000 $ 79,000 $ 84,000 $ 109,000 $ 60,000 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. f. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets). g. Equipment costing $2,800 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 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 this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the schedule of expected cash collections. Quarter Schedule of Expected Cash Collections April May June Cash sales $ 47,400 Credit sales 25,200 Total collections $ 72,600 Required 1 Required 2 Required 3 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise p Quarter - Merchandise Purchases Budget April May June Budgeted cost of goods sold $ 59,250 $63,000 Add desired ending merchandise inventory 50,400 Total needs 109,650 Less beginning merchandise inventory 47,400 Required purchases $ 62,250 Budgeted cost of goods sold for April = $79,000 sales 75% = $59,250. Add desired ending inventory for April = $63,000 ~ 80% = $50,400. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June March purchases $ 28,425 April purchases 31,125 31,125 May purchases June purchases Total disbursements Quarter $ 28,425 62,250 Shilow Company Cash Budget April May June Quarter $ 8,800 Beginning cash balance Add collections from customers 72,600 Total cash available 81,400 Less cash disbursements: For inventory 59,550 For expenses 17,820 2,800 80,170 1,230 For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance