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

Current assets as of March 31:
Cash	$ 7,200
Accounts receivable	$ 18,800
Inventory	$ 37,800
Building and equipment, net	$ 123,600
Accounts payable	$ 22,425
Common stock	$ 150,000
Retained earnings	$ 14,975

The gross margin is 25% of sales.

Actual and budgeted sales data:

March (actual)	$ 47,000
April	$ 63,000
May	$ 68,000
June	$ 93,000
July	$ 44,000

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, $2,000 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $927 per month (includes depreciation on new assets).

Equipment costing $1,200 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.

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.

Schedule of Expected Cash Collections
	April	May	June	Quarter
Cash sales	$37,800
Credit sales	18,800
Total collections	$56,600

Merchandise Purchases Budget
	April	May	June	Quarter
Budgeted cost of goods sold	$47,250	$51,000
Add desired ending merchandise inventory	40,800
Total needs	88,050
Less beginning merchandise inventory	37,800
Required purchases	$50,250
Budgeted cost of goods sold for April = $63,000 sales 75% = $47,250.
Add desired ending inventory for April = $51,000 80% = $40,800.
Schedule of Expected Cash DisbursementsMerchandise Purchases
	April	May	June	Quarter
March purchases	$22,425			$22,425
April purchases	25,125	25,125		50,250
May purchases
June purchases
Total disbursements

Shilow Company
Cash Budget
	April	May	June	Quarter
Beginning cash balance	$7,200
Add collections from customers	56,600
Total cash available	63,800
Less cash disbursements:
For inventory	47,550
For expenses	13,340
For equipment	1,200
Total cash disbursements	62,090
Excess (deficiency) of cash available over disbursements	1,710
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance