50.1K

Verified Solution

Link Copied!

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings $ 8.600 $ 24,400 $ 46,200 $ 118,800 $ 27,675 $ 150,000 $ 20,325 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: Mareh (actual) April May 5.61,000 $ 77,000 $ 82,000 $ 107.000 $ 58,000 June July Sales are 60% for cash and 40% on credit, Credit sales are collected in the month following sale. The accounts recevable at March 31 are a result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. 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 f. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,400 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly, Depreciation is $891 per month (includes depreciation on new assets) 9. Equipment costing $2,600 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 alla stancantonnnn The Internet tan the inne i hormonth form... Required: Using the preceding data: 1. Complete the schedule of expected cash collections 2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. 3. Complete the cash budget. 4. Prepare an absorption costing income statement for the quarter ended June 30. 5. Prepare a balance sheet as of June 30. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections Schedule of Expected Cash Collections April June Cash sales $ 46,200 Credit sales 24,400 Total collections $ 70,600 May Quarter (Required Required 2 > Required Required 2 Required 3 Required 4 Required 5 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Morchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $ 57,750 $ 61,500 Add desired ending merchandise inventory 49,200 Total needs 106,950 Less beginning merchandise inventory 46,200 Required purchases Budgeted cost of goods sold for April = $77,000 sales * 75% - $57,750 Add desired ending inventory for April = $61,500 * 80% = $49,200. Schedule of Expected Cash Disbursements --Merchandise Purchases April May June Quarter March purchases $ 27,675 $ 27,675 April purchases 30,375 30,375 60,750 May purchases June purchases Total disbursements Required 1 Required 2 Required 3 Required 4 Required 5 Complete the 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 $ 8,600 Add collections from customers 70,600 Total cash available 79,200 Less cash disbursements: For inventory 58,050 For expenses 17,260 For equipment 2,600 Total cash disbursements 77,910 Excess (deficiency) of cash available over disbursements 1.290 Financing Borrowings Repayments Interest Total financing Ending cash balance Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets Total assets Liabilities and Stockholders' Equity Stockholders' equity Total liabilities and stockholders' equity

Answer & Explanation Solved by verified expert

See Answer