The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: $ 9,00e $ 26,000 $ 48,600 $ 199, 200 $ 29,175 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common stock $ 150, 000 Retained earnings $ 13,625 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) $ 65,000 $ 81,000 $ 86,000 $ 111,000 $ 62,000 April ay June July c. Sales are 60% for cash and 40% on credit. Credit sales are collected In the month following sale. The accounts recelvable 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 pald for In the month of purchase; the other half is pald 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, $3,800 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $819 per month (Includes depreciation on new assets). g. Equlpment costing $3,000 will be purchased for cash in April. h. Management would like to malntaln 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 Required 5 Complete the schedule of expected cash collections. Schedule of Expected Cash Collections April May June Quarter Cash sales 48,600 Credit sales 26,000 Total collections 74,600 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold 60,750 64,500 Add desired ending merchandise inventory 51,600 Total needs 112,350 64,500 Less beginning merchandise inventory Required purchases 48,600 63,750 84,500 Budgeted cost of goods sold for April = $81,000 sales x 75% = $80,750. Add desired ending inventory for April = $64,500 x 80% = $51,600. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases 29,175 29,175 April purchases 31,875 31,875 63,750 May purchases June purchases Total disbursements 61,050 31,875 92,925 Shilow Company Cash Budget April May June Quarter Beginning cash balance 9.000 Add collections from customers 74,600 Total cash available 83,600 Less cash disbursements: For inventory 61.050 For expenses 18,380 For equipment 3,000 Total cash disbursements 82,430 Excess (deficiency) of cash available over disbursements 1,170 Financing: Borrowings Repayments Interest Total financing Ending cash balance 1.170 Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses: 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