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: points Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common shares Retained earnings 20,000 36,000 120,000 21,750 150,000 12,250 eBook References a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May $50.000 $ 60,000 $72,000 $90,000 $48,000 June 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 accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows: commissions, 12% of sales, rent, $2,500 per month; other expenses (excluding depreciation). 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (Includes depreciation on new assets). g. Equipment costing $1,500 will be purchased for cash in April. h. 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 the end of a month. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month. be paid at the end of each month based on the total loans outstanding for that month. Required: Using the data above, complete the following statements and schedules for the second quarter: 1. Schedule of expected cash collections: 20 points Schedule of Expected Cash Collections April May June Cash sales $ 36,000 Credit sales* 20,000 Total collections $ 56,000 $ 0 $ *40% of prior month's sales Quarter $ 36,000 20,000 $ 56,000 eBook 0 References 2-a. Merchandise purchases budget : June Quarter $ 0 $ 0 April May Budgeted cost of goods sold* $ 45,000 $ 54,000 Add desired ending inventoryt 43,200 Total needs $ 88,200 $ 54,000 Less beginning inventory 36,000 Required purchases $ 52,200 $ 54,000 *For April sales: $60,000 sales x 75% cost ratio = $45,000. +$54,000 x 80% = $43,200. $ 0 0 20 points 2-b. Schedule of expected cash disbursements for merchandise purchases: May June eBook April $ 21,750 26,100 Quarter $ 21,750 52,200 26,100 For March purchases For April purchases For May purchases For June purchases Total cash disbursements for purchases References $ 47,850 $ 26,100 $ 0 $ 73,950 3. Schedule of expected cash disbursements for selling and administrative expenses May June Commissions Rent Other expenses Total disbursements April $ 7,200 2,500 3,600 13,300 Quarter $ 7,200 2,500 3,600 13,300 0 0 20 points 4. Cash budget: (Round your intermediate calculations and final answers to the nearest whole dollar. Also, round up your interest calculations to the next whole dollar amount. Cash deficiency, repayments and interest should be indicated by a minus sign.) May June $ April 8,000 56,000 84,000 Quarter $ 8,000 56,000 64,000 eBook 0 0 References 47,850 13,300 Cash Budget 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: Borrowings Repayments Interest 1,500 62,650 1,350 47,850 13,300 1,500 62,650 1,350 00 00 Total financing Cash balance, ending | $ 1,350 $ 0 $ 0 $ 1,350 5. Prepare an absorption costing income statement for the quarter ending June 30. SOPER COMPANY Income Statement For the Quarter Ended June 30 20 points Cost of goods sold: eBook References Operating expenses: $ 0 6. Prepare a balance sheet as of June 30. 20 points SOPER COMPANY Balance Sheet June 30 Assets Current assets: eBook References Total current assets Total assets $ 0 Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity