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

Current assets as of March 31:
Cash	$	7,300
Accounts receivable	$	19,200
Inventory	$	38,400
Building and equipment, net	$	124,800
Accounts payable	$	22,800
Capital stock	$	150,000
Retained earnings	$	16,900

a.	The gross margin is 25% of sales.
b.	Actual and budgeted sales data:

March (actual)	$48,000
April	$64,000
May	$69,000
June	$94,000
July	$45,000

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, $2,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $936 per month (includes depreciation on new assets).
g.	Equipment costing $1,300 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 $38,400 Credit sales 19,200 Total collections $57,600 $0 $0 $0

2.	Complete the following:
Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $48,000 Add desired ending inventory 41,400 Total needs 89,400 0 0 0 Less beginning inventory 38,400 Required purchases $51,000 $0 $0 $0

	Budgeted cost of goods sold for April = $64,000 sales 75% = $48,000.
	Add desired ending inventory for April = $51,750 80% = $41,400.

	Schedule of Expected Cash DisbursementsMerchandise Purchases April May June Quarter March purchases $22,800 $22,800 April purchases 25,500 25,500 51,000 May purchases June purchases Total disbursements $48,300 $25,500 $0 $73,800

3.	Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.)

Shilow Company Cash Budget April May June Quarter Beginning cash balance $7,300 Add cash collections 57,600 Total cash available 64,900 0 0 0 Less cash disbursements: For inventory 48,300 For expenses 13,620 For equipment 1,300 Total cash disbursements 63,220 0 0 0 Excess (deficiency) of cash 1,680 0 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Ending cash balance $1,680 $0 $0 $0

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

	Shilow Company Income Statement For the Quarter Ended June 30 Sales Cost of goods sold: Beginning inventory Purchases Goods available for sale 0 Ending inventory 0 Gross margin 0 Selling and administrative expenses: Commissions Rent Depreciation Other expenses 0 Net operating income 0 Interest expense Net income 0

5.	Prepare a balance sheet as of June 30.

	Shilow Company Balance Sheet June 30 Assets Current assets: Account receivable Inventory Total current assets 0 Building and equipment-net Total assets $0 Liabilities and Stockholders Equity Account payable Common stock Stockholders' equity: Retained earnings 0 Total liabilities and stockholders equity $0