The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,500 Accounts receivable $ 20,000 Inventory $ 39,600 Building and equipment, net $ 127,200 Accounts payable $ 23,550 Common stock $ 150,000 Retained earnings $ 20,750 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual) $ 50,000 April $ 66,000 May $ 71,000 June $ 96,000 July $ 47,000 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, $2,300 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $954 per month (includes depreciation on new assets). Equipment costing $1,500 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.

Check my work 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 $ 7,500 $ 20,000 $ 39,600 $ 127,200 $ 23,550 $ 150,000 $ 20,750 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 50,000 $ 66,000 $ 71,000 $ 96,000 $ 47,000 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% 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, $2,300 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $954 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 olus 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 this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections. Quarter Cash sales Schedule of Expected Cash Collections April May June $ 39,600 20,000 $ 59,600 Credit sales Total collections Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purch Quarter Merchandise Purchases Budget April May June Budgeted cost of goods sold $ 49,500 $ 53,250 Add desired ending merchandise inventory 42,600 Total needs 92,100 Less beginning merchandise inventory 39,600 Required purchases $ 52,500 Budgeted cost of goods sold for April = $66,000 sales ~ 75% = $49,500. Add desired ending inventory for April = $53,250 ~ 80% = $42,600. Schedule of Expected Cash DisbursementsMerchandise Purchases April May June March purchases $ 23,550 April purchases 26,250 26,250 May purchases June purchases = = Quarter $ 23,550 52,500 Total disbursements Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget April $ 7,500 May June Quarter Beginning cash balance Add collections from customers 59,600 Total cash available 67,100 Less cash disbursements: 49,800 For inventory For expenses For equipment 14,180 1,500 Total cash disbursements 65,480 Excess (deficiency) of cash available over disbursements 1,620 Financing: Borrowings Repayments Interest Total financing Ending cash balance