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.................. $ $29,500$

Merchandise inventory............... $ $36,000$

Building and equipment, net................. $$120,000$

Accounts payable.............................. $ $25,750$

Common stock................................. $$150,000$

Retained earnings.............................. $ $17,750$

$$ The gross margin is $25\%$ of sales. Thus, the cost of merchandise and the cost of goods sold is

$75\%$ of selling price.

$$ Actual and budgeted sales data:

February $($actual$)..................$$$45,000$

March $($actual$).....................$$$50,000$

April.................................$$60,000$

May.................................$$72,000$

June.................................$$90,000$

July..................................$$48,000$

$$ Fifty percent of sales are collected in the month of sale and $40$ percent in the following

month, and $10$ percent in the second month following the month of sale. The accounts

receivable on March $31$ are the results of February credit sales $($i$.$e$.,10\%$ of February has not

been collected$)$ and March credit sales $($i$.$e$.,50\%$ of March has not been collected$).$

$$ Each month$$s ending inventory should equal $60\%$ of the following month$$s budgeted cost of

goods sold.

$$ Thirty percent of a month$$s inventory purchases is paid for in the month of purchase; the

other $70$ percent is paid for in the following month. The accounts payable balance at March

$31$ is the result of March purchases of inventory.

$2$

Required:

$1.(7\mathrm{.}5$ points$)$ Prepare the cash collection budget for the second quarter $($i$.$e$.,$ April, May, and June$).$

$2.(2$ points$)$ What is the accounts receivable balance at the end of June?

$3.(8$ points$)$ Prepare the merchandise purchases budget $($in dollars$)$ for the second quarter $($April$,$ May,

and June$).$ Use the following format:

Cost of Goods Sold

Plus: Expected Ending Inventory

Minus: Expected Beginning Inventory

$=$ Merchandise Purchases

$4.(6$ points$)$ Prepare the cash disbursement budget for merchandise purchases for the second quarter

$($April$,$ May, and June$).$

$5.(1\mathrm{.}5$ points$)$ What is the accounts payable balance for merchandise purchases at the end of June?