The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash 5 8,999 Accounts receivable 5 29,999 Inventory 5 36,999 Building and equipment, net 5 129,999 Accounts payable 5 21,759 Common stock 5 159,999 Retained earnings 5 12,259 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) 5 59,999 April 5 59,999 May 5 ?2,999 June 5 99,999 July 5 48,999 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% ofthe following month's budgeted cost of goods sold. e. lOne-half ofa month's inventory purchases is paid for in the month of purchase; the other halfis 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 $900 per month (includes depreciation on new assets). g. Equipment costing $1,500 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 ofJune 30. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections. rredit sales 2!] Dim Total collections 55 Elm} Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 45,000 $ 54,000 Add desired ending merchandise inventory 43,200 Total needs 88,200 54,000 0 0 Less beginning merchandise inventory 36,000 Required purchases $ 52,200 $ 54,000 $ 0 $ 0 Budgeted cost of goods sold for April = $60,000 sales x 75% = $45,000. Add desired ending inventory for April = $54,000 x 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 $ 47 850 $ 2 26, 100 $ 0 $ 73,950Beginning cash balance Add collections from customers Total cash available Less cash disbursements: For inventory For expenses For equipment Total cash disbursements G G D 5 Excess {deciency} of cash available over disbursements Financing: Borrowings Repayments Interest Total nancing Ending cash balance Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: 0 C 0 Selling and administrative expenses: 0Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets Total assets $ 0 Liabilities and Stockholders' Equity Stockholders' equity: Total liabilities and stockholders' equity 0