The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods Current assets as of March 311 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Capital stock Retained earnings $ $ $ $ $ $ $ 8,000 20, eee 36,000 120,000 21,250 15e, cee 12,250 a The gross margin is 25% of sales b. Actual and budgeted sales data. March (actual) April May $50, eee $60,000 $72.ee $90,000 $48, ce July 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. 0. 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 1. 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 9. 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 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 data above 1. Complete the following schedule. Quarter Schedule of Expected Cash Collections April May June Cash sales $ 30,000 Credit sales 20.000 Total collections $ 56,000 2. Complete the following: June Quarter Merchandise Purchases Budget April May Budgeted cost of goods sold $ 45,000 Add desired ending inventory 43,200 Total needs 88.200 Less beginning inventory 30.000 Required purchases 552 200 Budgeted cost of goods sold for April = $60,000 sales x 75% = $45,000. Add desired ending Inventory for April = $54,000 ~ 80% = $43,200. May Schedule of Expected Cash Disbursements-Merchandise Purchases April June Quarter March purchases $ 21,750 $ 21,750 April purchases 26.100 26.100 52,200 May purchases June purchases Total disbursements 3. Complete the following cash budget (Cash deficiency, repayments and Interest should be indicated by a minus sign.) Shilow Company Cash Budget April May 8,000 June Quarter $ Beginning cash balance Add cash collections Total cash available 58.000 64.000 Less cash disbursements: 47,850 13.300 1,500 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash Financing 62.650 1,350 Borrowings Repayments Interest Total financing Ending cash balance 4. Prepare an absorption costing Income statement for the quarter ended June 30. Shslow Company Income Statement For the Quarter Ended June 3D Cost of goods sold: Selling and administrative expenses: 5. 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