Problem (III) Budgeting: The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current balance as of March 31: Cash.. $8,000 Quarter Accounts receivable. $20,000 Cred Inventory. $36,000 Building and equipment, net.. $120,000 Accounts payable. $21750 Common stock. .$150,000 Retained earnings. $12,250 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: Quarter March (actual). $50,000 April.. $60,000 $72,000 May..... June. . $90,000 $48,000 July. **** f. B. C. d. e. 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 purchases of inventory. 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). Equipment costing $1,500 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: 1. Prepare Schedule of expected cash collections. 2. Prepare Merchandise purchases budget. 3. Prepare Schedule of expected cash disbursements-merchandise purchase. 4. Prepare Cash budget. 5. Prepare Income Statement for the quarter ended June 30. 6. Prepare Balance sheet for the quarter ending June 30. (Optional Extra Credit, 5 points)