Question
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods as of March 31: Cash $ 8,000 Accounts receivable
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods 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 shares | 150,000 | ||
Retained earnings | 12,250 | ||
|
a. | The gross margin is 25% of sales. |
b. | Actual and budgeted sales data are as follows: |
March (actual) | $ | 50,000 | |
April | $ | 60,000 | |
May | $ | 72,000 | |
June | $ | 90,000 | |
July | $ | 48,000 | |
|
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, $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). |
g. | Equipment costing $1,500 will be purchased for cash in April. |
h. | The company must maintain a minimum cash balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month. |
Required: |
Using the data above, complete the following statements and schedules for the second quarter: |
1. | Schedule of expected cash collections: |
2-a. | Merchandise purchases budget : |
2-b. | Schedule of expected cash disbursements for merchandise purchases: |
3. | Schedule of expected cash disbursements for selling and administrative expenses: |
4. | Cash budget: (Round your intermediate calculations and final answers to the nearest whole dollar. Also, round up your interest calculations to the next whole dollar amount. Cash deficiency, repayments and interest should be indicated by a minus sign.) |
5. | Prepare an absorption costing income statement for the quarter ending June 30. |
6. | Prepare a balance sheet as of June 30. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started