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) April May June July $ 52,000 $ 68,000 $ 73,000 $ 98,000 $ 49,000 - 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. Schedule of Expected Cash Collections April May June Quarter Cash sales $ 40,800 Credit sales 20,800 Total collections $ 61,600 $ 0 $ $ 0 0 + Merchandise Purchases Budget April May June Quarter $ Budgeted cost of goods sold $ 51,000 54,750 Add desired ending merchandise inventory 43,800 Total needs 94,800 54,750 0 0 Less beginning merchandise inventory 40,800 $ Required purchases + $ 54,000 $ 0 $ 0 54,750 Budgeted cost of goods sold for April = $68,000 sales * 75% = $51,000. Add desired ending inventory for April = $54,750 80% = $43,800. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases $ 24,300 $ 24,300 April purchases 27,000 27,000 54,000 May purchases June purchases Total disbursements $ 51,300 $ 0 $ 78,300 27,000 $ Shilow Company Cash Budget April May $ 7,700 61,600 June Quarter Beginning cash balance Add collections from customers Total cash available 69,300 0 0 0 51,300 14,740 1,700 67,740 0 0 0 Less cash disbursements: For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance 1,560 0 0 0 0 0 0 0 $ 1,560 $ 0 $ 0 $ 0 Shilow Company Income Statement For the Quarter Ended June 30 Accounts payable Cost of goods sold: 0 0 0 Selling and administrative expenses: 0 0 0 Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets 0 Total assets $ 0 Liabilities and Stockholders' Equity Stockholders' equity: 0 Total liabilities and stockholders' equity $ 0