The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods Current assets as of March 31 $8, 400 $ 23, 600 $ 45, 0OO $ 123, 600 $ 26, 925 $150, 0O0 $ 23, 675 Cash Accounts rece ivable Inventory Bui Iding and equipment, net Accounts payable Common stock Ret ai ned earnings a. The gross margin is 25% of sales b. Actual and budgeted sales data March (actual) Apr il ay une $ 59, 000 $75, 000 $ 80, 000 $105, 000 $56, 000 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, $3,200 per month; other expenses (excluding depreciation), 6% g. Equipment costing $2,400 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 $927 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 1 Required 2 Required 3 Required 4 Required5 Complete the schedule of expected cash collections. Schedule of Expected Cash Collections April $ 45,000 23,600 $ 68,600 $ May June Quarter Cash sales Credit sales Total collections Required 1Required 2 E Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases Merchandise Purchases Budget April $ 56,250$60,000 May June Quarter Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginnin Required purchases Budgeted cost of goods sold for April $75,000 sales 75%-356,250 Add desired ending inventory for April $60,000 x 80% $48,000 48,000 104,25060,000 g merchandise inventory 45,000 $59,250 $60,000$ Schedule of Expected Cash Disbursements-Merchandise Purchases April $ 26,925 May June Quarter March purchases April purchases May purchases June purchases Total disbursements $ 26,925 29.625 29.625 59,250 $56,550| $29,625| $. 0 $ 86,175 Required 1 Required 2 Required 3Required 4 Required5 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 Add collections from customers Total cash available Less cash disbursements $ 8,400 68,600 77,000 56,550 16,700 2,400 75,650 1,350 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borowings Repayments Interest Total financing Ending cash balance $ 1,350S 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 Required5 Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets Total current assets Total assets Liabilities and Stockholders' Equity Stockholders' equity Total liabilities and stockholders' equity