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

Current assets as of March 31:

Cash $ 9,200

Accounts receivable $ 26,800

Inventory $ 49,800

Building and equipment, net $ 104,400

Accounts payable $ 29,925

Common stock $ 150,000

Retained earnings $ 10,275

The gross margin is 25% of sales.

Actual and budgeted sales data: March (actual) $ 67,000

April $ 83,000

May $ 88,000

June $ 113,000

July $ 64,000

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

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.

Monthly expenses are as follows: commissions, 12% of sales;

rent, $4,000 per month;

other expenses (excluding depreciation), 6% of sales.

Assume that these expenses are paid monthly. Depreciation is $783 per month (includes depreciation on new assets).

Equipment costing $3,200 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.

Required: Using the preceding data: 1. Complete the following schedule:

Complete the following schedule:

	Schedule of Expected Cash Collections April May June Quarter Cash sales $49,800 Credit sales 26,800 Total collections $76,600 $0 $0 $0

2. Complete the following:

Complete the following:

Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $62,250 $66,000 Add desired ending merchandise inventory 52,800 Total needs 115,050 66,000 0 0 Less beginning merchandise inventory 49,800 Required purchases $65,250 $66,000 $0 $0 Budgeted cost of goods sold for April = $83,000 sales 75% = $62,250. Add desired ending inventory for April = $66,000 80% = $52,800. Schedule of Expected Cash DisbursementsMerchandise Purchases April May June Quarter March purchases $29,925 $29,925 April purchases 32,625 32,625 65,250 May purchases June purchases Total disbursements $62,550 $32,625 $0 $95,175

3. Complete the following cash budget:

Complete the following cash budget: (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Shilow Company Cash Budget April May June Quarter Beginning cash balance $9,200 Add collections from customers 76,600 Total cash available 85,800 0 0 0 Less cash disbursements: For inventory 62,550 For expenses 18,940 For equipment 3,200 Total cash disbursements 84,690 0 0 0 Excess (deficiency) of cash available over disbursements 1,110 0 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Ending cash balance $1,110 $0 $0 $0

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

Prepare an absorption costing income statement for the quarter ended June 30.

	Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: 0 0 0 Selling and administrative expenses: 0 0 0

5. Prepare a balance sheet as of June 30.

repare a balance sheet as of June 30.

	Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets 0 Total assets $0 Liabilities and Stockholders Equity Stockholders' equity: 0 Total liabilities and stockholders equity $0