The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 8,000 Accounts receivable 20,000 Inventory 36,000 Buildings and equipment, net 120,000 Accounts payable 21,750 Common shares 150,000 Retained earnings 12,250 The gross margin is 25% of sales. Actual and budgeted sales data are as follows: March (actual) $ 50,000 April $ 60,000 May $ 72,000 June $ 90,000 July $ 48,000 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 the result of March credit sales. Each months ending inventory should equal 80% of the following months budgeted cost of goods sold. One-half of a months inventory purchases is paid for in the month of purchase; the other one-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; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month and includes depreciation on new assets. Equipment will be acquired for cash: $1,500 in April. Management would like to maintain a minimum cash balance of $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow as needed 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, complete the following:

1. Schedule of expected cash collections

2. Merchandise purchases budget

3. Complete the following cash budget

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.