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The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Need help with 3, 4 AND 5 The following

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

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Need help with 3, 4 AND 5

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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 Building and equipment, net Accounts payable Capital stock Retained earnings S 8,300 S 23,200 S 44,400 S 126,000 S 26,550 S 150,000 S 25,350 a. The b. Actual and budgeted sales data gross margin is 25% of sales. March (actual) April May June July S 58,000 S 74,000 S 79,000 S 104,000 S 55,000 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, $3,100 per month, other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $945 per month (includes depreciation on new assets). g. Equipment costing $2,300 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 Required Using the data above 1. Complete the following schedule Schedule of Expected Cash Collections April May June Quarter Cash sales Credit sales Total collections 44,40047,400 62,400 31,600 $ 67,600 $ 77,000$ 94,000 154,200 84,400 238,600 23,200 29,600 2. Complete the following Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold Add desired ending inventory Total needs Less beginning inventory Required purchases 192,750 33,000 111,000 225,750 44,400 $ 58,500$ 74,250$ 48,600 $ 181,350 55,500 $ 59,250 $ 78,000 62,400 121,650 47,400 33,000 47,400 102,900 44,400 62,400 Schedule of Expected Cash Disbursements-Merchandise Purchases April $ 26,550 May June Quarter March purchases April purchases May purchases June purchases Total disbursements $ 26,550 58,500 74,250 24,300 $ 55,800 S 66,375 $ 61,425 $ 183,600 29,250 37,125 29,250 37,125 24,300 3. Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget April May June Quarter Beginning cash balance Add cash collections Total cash available Less cash disbursement 8,300 67,600 75,900 0 For inventory For expenses For equipment 55,800 16,420 2,300 74,520 1,380 Total cash disbursements 0 Excess (deficiency) of cash Financing 0 Borrowings Repayments Interest Total financing 0 0 Ending cash balance 1,380 $ 0 4 Prepare an absorption costing income statement forthe quarer ended June 30 Shilow Company Income Statement For the Quarter Ended June 30 Sales Beginning inventory Purchases 0 Ending inventory Gross margin 0 Selling and administrative expenses Commissions Rent Other expenses 0 Net operating income Interest expense Net income 0 0 5. Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets: Cash Account receivable Inventory Total current assets Building and equipment-net Total assets 0 0 Liabilities and Stockholders' Equity Account payable Stockholders' equity Common stock 0 Total liabilities and stockholders' equity 0

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