PROBLEM 9-20 Completing a Master Budget [LO2] The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods, as of March 31: Cash. ................................... Accounts receivable ......... Inventory ................ Building and equipment, net. Accounts payable .... Common shares................. Retained earnings .................. ....... $8,000 20,000 36,000 120,000 21,750 150,000 12,250 a. b. The gross margin is 25% of sales. Actual and budgeted sales data are as follows: March (actual). ........ April M ay ............. June ............. July ............................ $50,000 60,000 72,000 90,000 48,000 c. d. 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 month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. 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 pur- chases of inventory. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500 per month; other ex- penses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets). Equipment costing $1,500 will be purchased for cash in April. The company must maintain a minimum cash balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at 8. h. the end of a month. The monthly interest rate is 19. Interest must be paid at the end of each month based on the total loans outstanding for that month. Required: Using the data ahove, complete the following: 1. Schedule of expected cash collections: April May June Quarter Cash sales ... Credit sales"...... Total collections .. .. * 405 of price month's sales $36.000 20.000 $56.000 2. Merchandise purchases budget: April May June Quarter $$4,000 Budgeted cost of goods sold.... .. Add desired ending inventory........ Total needs ......... . Less beginning inventory ...... Required purchases.............. SAS.000* 43.200 88,200 36,000 SS2 200 | | || "For April sales: $60,000 sales x 75% cost ratio = $45,000 S54,000 X 80% = $43,200 Schedule of expected cash disbursements--Merchandise purchases: May June April $21,750 26,100 Quarter $21,750 52,200 March purchases... April purchases May purchases.. June purchases.... Total disbursements .... $47.850 3. Schedule of expected cash disbursements-Selling and administrative expenses: April May June Quarter $ 7,200 Commissions... Rent. Other expenses Total disbursements. 4. Cash budget April May June Quarter $ 8.000 56.000 $64.000 Cash balance, beginning...... Add cash collections Total cash available Less cash disbursements For inventory.... For expenses. For equipment.. Total cash disbursements ........... Excess (deficiency) of cash.......... Financing $47.8SO 13.300 1,500 62650 $ 1,350 5. Prepare an absorption costing income statement, similar to the one shown in Schedule 9, for the quarter ended June 30. Prepare a balance sheet as of June 30. 6