The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: $ 8,000 $ 22,000 $ 42,600 $ 130,800 $ 25,425 $150,000 $ 27,975 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings a. The gross margin is 25% of Sales b. Actual and budgeted sales data: $ 55,000 $ 71,000 $ 76,000 $101,000 $ 52,000 March (actual) April May 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 f. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,800 per month; other expenses (excluding depreciation), 6% g. Equipment costing $2,000 will be purchased for cash in April. accounts payable at March 31 are the result of March purchases of inventory. of sales. Assume that these expenses are paid monthly. Depreciation is $981 per month (includes depreciation on new assets). 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: Using the preceding data: 1. Complete the schedule of expected cash collections. 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases 3. Complete the cash budget. 4. Prepare an absorption costing income statement for the quarter ended June 30 5. Prepare a balance sheet as of June 30. Required 1Required 2 Required 3 Required 4 2Required3 Required 5 Complete the schedule of expected cash collections. Schedule of Expected Cash Collections June April S 42,600 May Quarter Cash sales Credit sales Total collections 22,000 S64,600 $ 0 Required 1 Required 2Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Merchandise Purchases Budget April S 53,250$ 57,000 Quarter May June Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Required purchases Budgeted cost of goods sold for April-$71,000 sales* 75%-$53,250 Add desired ending inventory for April = $57,000 80% = $45,600 45,600 98,850 42,600 57,000 $ 56,250$ 57,000 $ 0 Schedule of Expected Cash Disbursements-Merchandise Purchases April $ 25,425 May June Quarter $ 25,425 March purchases April purchases May purchases June purchases Total disbursements 28,125 28,125 56,250 0 $ 81,675 $ 53,550 $ 28,125 $ Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minu Shilow Company Cash Budget April May June Quarter 8,000 64,600 72,600 Beginning cash balance Add collections from customers Total cash available Less cash disbursements 53,550 15,580 2,000 71,130 1,470 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash 0 0 0 available over disbursements Financing Borrowings Repayments Interest Total financing 1,470 $ Ending cash balance Required 2 Required 4 Required 1 Prepare an absorption costing income statement for the quarter ended June 30. Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: 0) 0) Selling and administrative expenses: 0 0) 0 Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets 0) Total assets Liabilities and Stockholders' Equity Stockholders' equity: 0) otal liabilties and stockholders' equity