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 |
| Building and equipment, net | $ | 120,000 |
| Accounts payable | $ | 21,750 |
| Common stock | $ | 150,000 |
| Retained earnings | $ | 12,250 |
|
The gross margin is 25% of sales.
Actual and budgeted sales data:
| | | |
| 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 a 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 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.
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.
CH 8 Master Budget Seved Help Save & Exit Check 1 1 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. 75 points Skipped Complete this question by entering your answers in the tabs below. Print Roterences Required Required 2 Required 3 Required Required Complete the schedule of expected cash collections Schedule of Expected Cash Collections April May June Quarter Cash sales $36.000 Credit sales 20.000 Total collections 550.000 red 3 > Saved Help S. CH 8 Master Budget 1 Required 1 Required 2 Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchas 75 points Skipped eBook Print References Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 45,000 $ 54,000 Add desired ending merchandise 43.2001 inventory Total needs 88 200 Loss beginning merchandise inventory 36,000 Required purchases $ 52,200 Budgeted cost of goods sold for April - $60,000 sales75% $45,000 Add desired ending Inventory for April = $54,000 80%-$43 200 Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases $ 21.750 $ 21.750 April purchases 26,100 $26.100 52 200 May purchases Mc GEW HI Prev 1 of 1 Next CH 8 Master Budget Required 1 Required 2 Required 3 Required 4 Required 5 1 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandis 75 points Skipped eBook Print References Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 45,000 $ 54,000 Add desired ending merchandise 43,200 inventory Total needs 88.200 Less beginning merchandise Inventory 36,000 Required purchases $ 52,200 Budgeted cost of goods sold for April $60,000 sales75% - $45.000 Add desired ending inventory for April - $54.000 80% - $43,200 Schedule of Expected Cash Disbursements Merchandise Purchases April May June Quarter March purchases $ 21.750 $ 21.750 April purchases 26.100 $ 26,100 52.200 May purchases June purchases Total disbursements Me Graw HIN Prov 1 of 1 Next CH 8 Master Budget Required 2 Required 3 Required 4 Required 5 Required 1 1 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) 75 Shilow Company Cash Budget April May $ 8,000 June Quarter Skipped 56.000 64,000 Book Print References Beginning cash balance Add collections from customers Total cash available Less cash disbursements For inventory For expenses For equipment Total cash disbursements Excel (deficiency of cash available over disbursements Financing Borrowings Repayments 47.850 13,300 1,500 62,650 1.350 ME Grow NI Prev 1 of 1 !! Next 1 - Shilow Company Cash Budget April May $ 8,000 June Quarter 75 points Skipped 56.000 64,000 DO Print Beginning cash balance Add collections from customers Total cash available Less cash disbursements For inventory For expenses For equipment Total cash disbursements Excess (deficiency of cash viable over disbursements Financing Borrowing Repayments Interest Total financing Ending cash balance 47.850 13.300 1.500 62,650 References 1,350 Graw Prev 1 of 1 Next Question 1 Assignments: (2155-Full) MA Dashboard Gmail (35) Pleterest Saved CH 8 Master Budget 1 Shilow Company Income Statement For the Quarter Ended June 30 75 points Cost of goods sold Skipped Book print Selling and administrative expenses References Me Graw Hill Prev 1 of 1 Next CH & Master Budget 6 1 1 Shilow Company Balance Sheet June 30 Assets 75 points Current assets Skipped eBook Print Total current assets References Total assets Liabilities and Stockholders' Equity Stockholders' equity Mc GEO HU Prev 1 of 1 Next (35) Pinterest CH 8 Master Budget 1 75 points Total current assets Skloped Total assets Liabilities and Stockholders' Equity Book Print Stockholders' equity References Total liabilities and stockholders equity
