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

Current assets as of March 31:
Cash	$	8,600
Accounts receivable	$	24,400
Inventory	$	46,200
Building and equipment, net	$	118,800
Accounts payable	$	27,675
Capital stock	$	150,000
Retained earnings	$	20,325

The gross margin is 25% of sales.

Actual and budgeted sales data:

March (actual)	$	61,000
April	$	77,000
May	$	82,000
June	$	107,000
July	$	58,000

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, $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).

Equipment costing $2,600 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 data above:

1. Complete the following schedule.

	Schedule of Expected Cash Collections April May June Quarter Cash sales $46,200 $49,200 $64,200 $159,600 Credit sales 24,400 30,800 32,800 88,000 Total collections $70,600 $80,000 $97,000 $247,600

2. Complete the following:

	Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $57,750 Add desired ending inventory 49,200 Total needs 106,950 0 0 0 Less beginning inventory 46,200 Required purchases $60,750 $0 $0 $0

	Schedule of Expected Cash DisbursementsMerchandise 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 $58,050 $30,375 $0 $88,425

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 $8,600 Add cash collections 70,600 Total cash available 79,200 0 0 0 Less cash disbursements: For inventory 58,050 For expenses 17,260 For equipment 2,600 Total cash disbursements 77,910 0 0 0 Excess (deficiency) of cash 1,290 0 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Ending cash balance $1,290 $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 Cost of goods sold: 0 0 0 Selling and administrative expenses: 0 0 0

5. Prepare 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