The following data relate to the operations of Medco Company, a wholesale distributor of consumer goods:

Using the information above:

The following data relate to the operations of Medco Company, a wholesale distributor of consumer goods: As of March 31 (USD): Cash 15,500 Accounts payable 35,500 Accounts receivable 21,000 Capital stock 41,000 Inventory 10,080 Retained earnings 102,068 Buildings and equipment (net) 140,000 Assumptions a) Gross margin is of sales 35% b) Actual and budgeted sales data: USD March (actual) 70,000 June 75,000 April 82,000 July 70,000 May 63,000 c) Sales are for cash and on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. Break down between Cash & Credit sales is as follow: Cash Sale 65% Credit Sales 35% d) Each month's ending inventory should equal 20% of the following month's budgeted cost of goods sold. e) 25% of a month's inventory purchases are paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory. f) Monthly expenses are as follows: salaries and wages, $12,500 per month; rent, $3,600 per month; other expenses (excluding depreciation), 8% of sales. Assume that these expenses are paid monthly. Depreciation is $1,000 per month (includes depreciation on new assets). g) Equipment costing $9,000 will be purchased for cash in April. h) The company must maintain a minimum cash balance of $5,000. 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; borrowing must be in multiples of $1,000. The annual interest rate is 10%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12, 2/12, and so forth). Required using the above data: June Quarter - Total 1) Prepare Schedule of Expected Cash Collections (5 points) USD April April May Cash sales Credit sales Total collections 0 0 0 0 June Quarter - Total Explanation 2) Prepare Merchandise Purchases Budget (8 Points) USD 1 April May Budgeted cost of goods sold Add: desired ending inventory Total needs 0 Less: beginning inventory Required purchases 0 0 0 0 0 0 0 Explanation 3) Prepare Schedule of Expected Cash Disbursements-Merchandise Purchases (4 points) April May June March purchases April purchases May purchases June purchases Total disbursements 0 0 Quarter - Total 0 0 0 0 4) Prepare Schedule of Expected Cash Disbursements-Selling and Administrative Expenses (7 points) April May June Quarter - Total Explanation Salaries and wages 66 Rent Other expenses Total disbursements 68 69 5) Complete the following cash budget (17 points) 73 74 Quarter - Total Explanation 75 76 77 78 79 80 81 (Cash deficiency, repayments and interest should be indicated by a minus sign.) April May June 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 0 Financing: Borrowings Repayments Interest Total financing Cash balance, ending 82 83 84 85 86 87 88 - 89 0 90 91 92 93 6) Prepare an absorption costing income statement for the quarter ended June 30 ( 12 points) 96 Explanation 97 98 99 Income Statement - Qtr Ended June 30 Sales Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory I T Gross margin 100 101 102 103 0 01 #DIV/0! Selling and administrative expenses: 104 105 106 107 108 Salaries and wages Rent Depreciation Other expenses Total S&A Expense Net operating loss Interest expense Net Income/loss 109 110 111 112 113 7) Prepare a balance sheet as of June 30 (12 points) 115 116 117 118 Explanation 119 120 121 122 123 124 Balance Sheet Jun-30 Assets Current assets: Cash Accounts receivable Inventory Total current assets Buildings and equipment-net Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable 125 126 127 128 129 131 132 133 134 Stockholders' equity: Capital stock Retained earnings Total equity Total liabilities and equity 135 136 137 138 139 140 141 Retained earnings: Retained earnings, beginning Add net income (loss) Retained earnings, ending