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. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June July $50,000 $60,000 $72,000 $90,000 $48,000 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, $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. 5. Prepare an absorption costing income statement for the quarter ending June 30. SOPER COMPANY Income Statement For the Quarter Ended June 30 Sales Cost of goods sold: $ 222,000 222,000 Operating expenses: 222,000 Net income $ 222,000 6. Prepare a balance sheet as of June 30. SOPER COMPANY Balance Sheet June 30 Assets Current assets: Cash $ Account receivable 4,910 36,000 28,800 Inventory Total current assets Buildings and equipment, net Total assets Liabilities and Stockholders' Equity Account payable 69,710 118,800 188,510 $ $ 21,150 Stockholders' equity: Common stock Retained earnings $ 150,000 17,360 167,360 188,510 Total liabilities and stockholders' equity $