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 Capital stock Retained earnings $ 9,300 $ 27,200 50,400 $ 102,000 $ $30,300 150,000 $ $ 8,600 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $68,000 $84,000 $89,000 $114,000 $65,000 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. Each month's ending inventory should equal 80% of the following month's budgeted d. 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, $4,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $765 per month (includes depreciation on new assets) g. Equipment costing $3,300 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 $ 50,400 Credit sales 27,200 Total collections $ 77,600 Check Figure: Total Cash Collections for Quarter $ 268,600 Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 63,000 Add desired ending inventory 53,400 Total needs 116,400 Less beginning inventory 50,400 Required purchases $ 66,000 Check Figure: Total Merchandise Purchases for Quarter $ 203,850 Budgeted cost of goods sold for April = $84,000 sales 75% = $63,000. Add desired ending inventory for April = $66,750 x 80% = $53,400. Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases $ 30,300 $ 30,300 April purchases 33,000 33,000 66,000 May purchases June purchases Total disbursements Check Figure: Total Quarterly Cash Disbursements for Merchandise $ 206,100 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.) Quarter Shilow Company Cash Budget April May June Beginning cash balance $ 9,300 Add cash collections 77,600 Total cash available 86,900 Less cash disbursements: For inventory 63,300 For expenses 19,220 For equipment 3,300 Total cash disbursements 85,820 Excess (deficiency) of cash 1,080 Financing Borrowings Repayments Interest Total financing Ending cash balance Check Figure for April $ 4,080 Check Figure for Quarter $ 4,310