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The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings $ 7,700 $ 20,800 $ 40,800 $ 129,600 $ 24,300 $ 150,000 $ 24,600 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) $ 52,000 $ 68,000 $ 73,000 April May June July $ 98,000. $ 49,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at Marc 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. Th accounts payable at March 31 are the result of March purchases of inventory. f. 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 $972 per month (includes depreciation on new assets). g. Equipment costing $1,700 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 comnaunded. The company would se far se it ie shle renau the lean alue serumulated internet at the and of the quarter 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 accounts payable at March 31 are the result of March purchases of inventory. f. 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 $972 per month (includes depreciation on new assets). g. Equipment costing $1,700 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: 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 30.1 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections. Schedule of Expected Cash Collections. Cash sales Credit sales Total collections April $ 40,800 20,800 $ 61,600 May June Quarter Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Budgeted cost of goods sold Merchandise Purchases Budget Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Required purchases Budgeted cost of goods sold for April Add desired ending inventory for April April May $ 51,000 $ 54,750 43,800 94,800 40,800 $ 54,000 $68,000 sales 75% $51,000. $54,750 80% $43,800. June Quarter Schedule of Expected Cash Disbursements-Merchandise Purchases March purchases April purchases April $ 24,300 May June Quarter $ 24,300 27,000 27,000 54,000 May purchases June purchases Total disbursements Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget April May June Quarter Beginning cash balance $ 7,700 Add collections from customers 61,600 Total cash available 69,300 Less cash disbursements: For inventory 51,300 For expenses 14,740 For equipment 1,700 Total cash disbursements 67,740 Excess (deficiency) of cash 1,560 available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance < Required 2 Required 4 > Required 1 Required 2 Required 3 Required 4 Required 5 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: Selling and administrative expenses: Required 1 Required 2 Required 3 Required 4 Required Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Current assets: Total current assets Assets Total assets Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity

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