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 20,000 $ 36,000 $ 120,000 $ 21,750 150,000 $12,250 $ Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April ay June 50,000 $ 60,000 72,000 90,000 48,000 July 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, $2,500 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. 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 Required 1 Required 3 Required 4 Required 5 Required 2 Complete the schedule of expected cash collections. Schedule of Expected Cash Collections April May June Quarter $ 36,000 43,200 54,000 Cash sales 133,200 84,800 $ 218,000 Credit sales 20,000 28,800 36,000 56,000 72,000 90,000 Total collections Required 4 Required 1 Required 2 Required 3 Required 5 Complete the merchandise purchases budget and the schedule of expected cash di Merchandise Purchases Budget April May Quarter June $ 166,500 $45,000 54,000 67,500 Budgeted cost of goods sold Add desired ending merchandise inventory 43,200 54,000 126,000 28,800 Total needs 88,200 108,000 96,300 292,500 Less beginning merchandise inventory 36,000 133,200 43,200 54,000 $ 64,800 42,300 $52,200 Required purchases 159,300 Budgeted cost of goods sold for April $60,000 sales x 75% = $45,000. Add desired ending inventory for April $54,000 x 80% = $43,200 Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter $ 21,750 March purchases 21,750 April purchases May purchases 26,100 26,100 52,200 June purchases 47,850 26,100 $ 73,950 0 Total disbursements Required 1 Required 3 Required 4 Required 5 Required 2 Complete the cash budget. (Cash deficiency, repayments and interest should Shilow Company Cash Budget April May Quarter June Beginning cash balance Add collections from $ 8,000 56,000 customers Total cash available 64,000 0 Less cash disbursements: 47,850 For inventory For expenses 13,300 For equipment 1,500 Total cash disbursements 62,650 0 0 0 Excess (deficiency) of cash available over disbursements 1,350 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 $ 0 0 $ $ $ 1,350 Ending cash balance O Required 2 Required 4 Required 1 Required 3 Required 5 Prepare an absorption costing income statement for the quarter ended June 30. Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses: 0 Required 1 Required 3 Required 5 Required 2 Required 4 Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets 0 $ 0 Total assets Liabilities and Stockholders' Equity Stockholders' equity: 0 $ Total liabilities and stockholders' equity 0