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
Accounts receivable	$	20,000
Inventory	$	36,000
Building and equipment, net	$	120,000
Accounts payable	$	21,750
Common stock	$	150,000
Retained earnings	$	12,250

1. The gross margin is 25% of sales.

2. Actual and budgeted sales data:

March (actual)	$	50,000
April	$	60,000
May	$	72,000
June	$	90,000
July	$	48,000

3. 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.

4. Each months ending inventory should equal 80% of the following months budgeted cost of goods sold.

5. 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.

6. 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).

7. Equipment costing $1,500 will be purchased for cash in April.

8. 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.

Complete the schedule of expected cash collections. Schedule of Expected Cash Collections April $36,000 20,000 $56,000 May Quarter June Cash sales Credit sales Total collections Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases Merchandise Purchases Budget May April 45,000 $54,000 June Quarter Budgeted cost of goods sold Add desired ending merchandise inventory 43,200 Total needs Less beginning merchandise inventory Required purchases 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 88,200 36,000 $52,200 Schedule of Expected Cash Disbursements-Merchandise Purchases April $21,750 May June Quarter $ 21,750 March purchases April purchases May purchases June purchases Total disbursements 52,200 26,100 $ 26,100 Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Shilow Company Cash Budget May April June Quarter $ 8,000 56,000 64,000 Beginning cash balance Add collections from customers Total cash available Less cash disbursements 47,850 13,300 1,500 62,650 1,350 For inventory For expenses For equipment Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance Prepare an absorption costing income statement for the quarter ended June Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses: 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