The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods Current assets as of March 31: Cash $ 9.000 Accounts receivable $ 26,000 Inventory $ 48,600 Building and equipment, net $ 109,200 Accounts payable $ 29,175 Common stock $ 150,000 Retained earnings $ 13,625 a The gross margin is 25% of sales b. Actual and budgeted sales data: March (actual) April May June July $ 65,000 $ 81,000 $ 86,000 $ 111,000 $ 62,000 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. 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 1. Monthly expenses are as follows commissions, 12% of sales, rent, $3,800 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly Depreciation is $819 per month (includes depreciation on new assets) g Equipment costing $3,000 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 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 Credit sales Total collections Schedule of Expected Cash Collections April May June $ 48,600 26,000 $ 74,600 Required Required 2 > Required 1 Required 2 Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Quarter Merchandise Purchases Budget April May June Budgeted cost of goods sold $ 60.750 $ 64,500 Add desired ending merchandise inventory 51,600 Total needs 112,350 Less beginning merchandise inventory 48,600 Required purchases $ 63,750 Budgeted cost of goods sold for April = $81,000 sales x 75% = $60,750 Add desired ending inventory for April = $64,500 * 80% + $51,600 Schedule of Expected Cash Disbursements Merchandise Purchases April May June March purchases $ 29.175 April purchases 31,875 31.875 May purchases June purchases Total disbursements Quarter $ 29.175 63,750 Required 1 Required 2 Required 3 Required 4 Required 5 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) May June Quarter Shilow Company Cash Budget April Beginning cash balance $ 9,000 Add collections from customers 74,600 Total cash available 83,600 Less cash disbursements For inventory 61,050 For expenses 18,380 For equipment 3,000 Total cash disbursements 82.430 Excess (deficiency) of cash available over disbursements 1.170 Financing Borrowings Repayments Interest Total financing Ending cash balance Required 1 Required 2 Required 3 Required 4 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 Required 2 Required 4 Required 1 Required 3 Required 5 Prepare a balance sheet as of June 30. Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Stockholders' equity Total liabilities and stockholders' equity