The key information and instructions related to the project is listed below:

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

Project $-$ Beginning Balances

The gross margin is $25\%$ of sales.

Actual and budgeted sales data:

Project $-$ Sales Figures

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 month's ending inventory should equal $80\%$ of the following month's budgeted cost of goods sold.

One$-$half of a month's 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, $$2,500$ per month; other expenses $($excluding depreciation$),6\%$ of sales. Assume that these expenses are paid monthly. Depreciation is $$900$ per month $($includes depreciation on new assets$).$

Equipment costing $$1,500$ 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.

Using the data provided above, use the Excel Template provided to prepare the following budget schedules:

Sales Budget $($Merely enter the sales data provided.$)$

Schedule of Expected Cash Collections

Merchandise Purchases Budget

Schedule of Expected Cash Disbursements $-$ Merchandise Purchases

Schedule of Expected Cash Disbursements $-$ Selling and Administrative Expenses

Cash BudgetSchedule of Expected Cash Collections

April May June Quarter

Cash Sales $$36,000$ $$43,200$ $$54,000$ $$133,200$

Credit Sales $20,000$ $$24,000$ $$28,800$ $$72,800$

Total Collections $$56,000$ $$67,200$ $$82,800$ $$206,000$

Merchandise Purchases Budget

April May June Quarter

Budgeted Cost of Goods Sold $$45,000$ $$54,000$ $$67,500$ $$166,500$

add: Desired Ending Inventory $43,200$ $$54,000$ $$28,800$ $$126,000$

Total Needs $88,200$ $$108,000$ $$96,300$ $$292,500$

less: Beginning Inventory $36,000$ $$43,200$ $$54,000$ $$133,200$

Required Purchases $$52,200$ $$64,800$ $$42,300$ $$159,300$

Schedule of Expected Cash Disbursements $-$ Merchandise Purchaes

April May June Quarter

March Purchases $$21,750$ $$21,750$

April Purchases $26,10026,10052,200$

May Purchases $32,40032,40064,800$

June Purchases $21,15021,150$

Total Disbursements $$47,850$ $$58,500$ $$53,550$ $$159,900$

Schedule of Expected Cash Disbursements $-$ Selling & Administrative

April May June Quarter

Commissions $$7,200$

Rent $2,500$

Other Expenses $3,600$

Total Disbursements $$13,300$

Cash Budget

April May June Quarter

Cash Balance Beginning $$8,000435045908000$

Add: Cash Collections $56,00067,20082,80020,600$

Total Cash Available $64,00071,55087,390214,000$

Less Cash Dis

bursements

For Inventory $47,85058,50053,550159,900$

For Expenses $13,30015,46018,70047,460$

For Equipment $1,500--1,500$

Total Cash Disbursements $62,65073,96072,250208,860$

Excess $($deficiency$)$ of Cash $1,350(2,410)15,1405,140$

Borrowing $3,0007,000-10,000$

Repayments $--(10,000)(10,000)$

Interest Paid $--(230)(230)$

Ending Cash Balance $$3,000$ $$7,000$ $$(10,230)$ $$(230)$