The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

Current assets as of March 31:
Cash	$ 9,400
Accounts receivable	$ 27,600
Inventory	$ 51,000
Building and equipment, net	$ 99,600
Accounts payable	$ 30,675
Common stock	$ 150,000
Retained earnings	$ 6,925

The gross margin is 25% of sales.

Actual and budgeted sales data:

March (actual)	$ 69,000
April	$ 85,000
May	$ 90,000
June	$ 115,000
July	$ 66,000

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.

Each months ending inventory should equal 80% of the following months budgeted cost of goods sold.

One-half of a months 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.

Monthly expenses are as follows: commissions, 12% of sales; rent, $4,200 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $747 per month (includes depreciation on new assets).

Equipment costing $3,400 will be purchased for cash in April.

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 of June 30.

Complete the schedule of expected cash collections.

Schedule of Expected Cash Collections
	April	May	June	Quarter
Cash sales	$51,000
Credit sales	27,600
Total collections	$78,600

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	$63,750	$67,500
Add desired ending merchandise inventory	54,000
Total needs	117,750
Less beginning merchandise inventory	51,000
Required purchases	$66,750
Budgeted cost of goods sold for April = $85,000 sales 75% = $63,750.
Add desired ending inventory for April = $67,500 80% = $54,000.
Schedule of Expected Cash DisbursementsMerchandise Purchases
	April	May	June	Quarter
March purchases	$30,675			$30,675
April purchases	33,375	33,375		66,750
May purchases
June purchases
Total disbursements

Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Shilow Company
Cash Budget
	April	May	June	Quarter
Beginning cash balance	$9,400
Add collections from customers	78,600
Total cash available	88,000
Less cash disbursements:
For inventory	64,050
For expenses	19,500
For equipment	3,400
Total cash disbursements	86,950
Excess (deficiency) of cash available over disbursements	1,050
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance

Prepare an absorption costing income statement for the quarter ended June 30.

Prepare a balance sheet as of June 30.

Prepare a balance sheet as of June 30