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The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: a. The gross margin is 25% of sales b.
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: a. The gross margin is 25% of sales b. Actual and budgeted sales data: c.Sales are 60% for cash and 40% on credit. Credit sales are colected in the month following sale. The accounts receivable at Markith 31 are a terult of March credit sales. d. Each month's ending inventory shouid equal 80% of the following month's budgeted cost of goods sold: e. One haf of a month's inventory purchases is paid for in the month of parchase, 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, 125 of sales; rent, $2.400 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are pald monthly. Depreciation is $963 per month (includes depreciation on new assets) 9. Equipment costing $1.600w il be purchased for cash in April. h. Management would fike to maintain a minimum cash bolance of at least $4,000 at the end of each month. The company has an agrement 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 expectad cash distursements for merchandise purchases. 3. Complete the cash budget. 4. Prepart an absorption costing income statement for the quarter ended June 30 5. Prepare a balance sheet as of June 30
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