The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 8,000 Accounts receivable $ 20,000 Inventory 5 36,000 Building and equipment, net $ 120,000 Accounts payable $ 21,750 Common stock $ 150,000 Retained earnings $ 12,250 ' a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) $ 50,000 April $ 60,000 May $ 72,000 June 5 90,000 July 5 48,000 V__________________________ 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. 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 $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. 125 Merchandise purchases budget: 126 April May June Quarter July 127 Total Sales (A) 60000 72000 90000 222000 48000 128 Budgeted cost of goods sold (A*75%) 45000 54000 67500 166500 36000 129 Add desired ending inventory @80% of next months COGS 43200 54000 28800 28800 130 Total needs 88200 108000 96300 195300 131 Less beginning inventory 36000 43200 54000 36000 132 Required purchases 52200 64800 42300 159300 133 134 Schedule of Expected cash Disbursements: 135 April May June Quarter A/P 136 March purchases (Accounts Payable Balance) 21750 21750 137 April purchases 26100 26100 52200 138 May purchases 32400 32400 64800 139 June purchases 21150 21150 21150 140 Total disbursements 47850 58500 53550 159900 141 143 Schedule of expected cash disbursements-selling and administrative expenses 144 April May June Quarter 145 Commissions @12% of sales 7200 8640 10800 26640 146 Rent 2500 2500 2500 7500 147 Other expenses 6% f sales 3600 4320 5400 13320 148 Total disbursements 13300 15460 18700 47460 149 150 Shilow Company 151 Cash Budget 152 April May June Quarter 153 Beginning , Cash balance 8000 4350 4590 3000 154 Add Collection from Customers 56000 67200 82800 206000 155 Total cash available 64000 71550 87390 214000 156 Less disbursements: 157 For inventory 47850 58500 53550 159900 158 For expenses 13300 15460 18700 47460 159 For Equipment 1500 1500 160 Total cash disbursements 62650 73960 72250 208860 161 Excess (Deficiency) of cash available over disbursements 1350 2410 15140 5140 162 Financing: 0 163 Borrowing As ending balance is 4000 and borrowing in 1000(4000-1350) 3000 7000 10000 164 Repayments (3000+7000) 10000 -10000 165 Interest (3000*1%*3+7000*1%*2) 0 230 230 166 Total financing 3000 7000 -10230 -230 167 Cash balance, ending 1350 4590 49101 4910