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

Current assets as of March 31:

Cash $ 8,200

Accounts receivable $22,800

Inventory $ 43,800

Building and equipment, net $128,400

Accounts payable, $26,175

Capital stock, $150,000

Retained earnings $ 27,025

a. The gross margin is 25% of sales.

b. Actual and budgeted sales data: March (actual) $57,000 April $73,000 May $78,000 June $103,000 July $54,000

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.

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

e. 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.

f. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,000 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $963 per month (includes depreciation on new assets).

g. Equipment costing $2,200 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
Credit Sales
Total Collections

Merchandise Purchases Budget

	April	May	June	Quarter
Budgeted Cost of Goods Sold	$54,750
Add Desired Ending Inventory	$46,800
Total Needs	$101,550
Less Beginning Inventory	$43,800

Required Purchases $57,750

Budgeted Cost of Goods Sold for April= $73,000 sales X 75%=$54,750

Add Desired Ending Inventory for April= $58,500 X 80%=$46,800

Schedule of Expected Cash Disbursements- Merchandise Purchases

	April	May	June	Quarter
March Purchases	$26,175			$26,175
April Purchases	$28,875	$28,875		$57,750
May Purchases		$36,750	$36,750	$73,500
June Purchases			$23,925	$23,925
Total Disbursements

Completed Following Cash Budget

(Borrow & Repay in increments of $1,000. Cash Deficiency, repayments & interest should be indicated by a minus sign)

Shilow Company

Cash Budget

	April	May	June	Quarter
Beginnning Cash Balance	8,200
Add Cash Collections	66,600
Total Cash Avail	74,800
Less Cash Disbursements
For Inventory	$55,050

For Expenses $16,140

For Equipment $2,200

Total Cash Disbursements $73,390

Excess(Deficiency) of Cash $1,410

Financing:

Borrowings:

Repayments:

Interest:

Total Financing

Ending Cash Balance $1,410

4.Prepare an absorption costing income satement for the quarter ended June 30th

5. Prepare a Balance Sheet as of June 30th