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

Current assets as of March 31:
Cash	$	8,900
Accounts receivable	$	25,600
Inventory	$	48,000
Building and equipment, net	$	111,600
Accounts payable	$	28,800
Capital stock	$	150,000
Retained earnings	$	15,300

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

March (actual)	$64,000
April	$80,000
May	$85,000
June	$110,000
July	$61,000

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, $3,700 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $837 per month (includes depreciation on new assets).
g.	Equipment costing $2,900 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. Shilow Company Schedule of Expected Cash Collections April May June Quarter Cash sales $48,000 Credit sales 25,600 Total collections $73,600 $0 $0 $0 2. Complete the following: Shilow Company Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $60,000 Add desired ending inventory 51,000 Total needs 111,000 0 0 0 Less beginning inventory 48,000 Required purchases $63,000 $0 $0 $0 Budgeted cost of goods sold for April = $80,000 sales 75% = $60,000. Add desired ending inventory for April = $63,750 80% = $51,000. Shilow Company Schedule of Expected Cash DisbursementsMerchandise Purchases April May June Quarter March purchases $28,800 $28,800 April purchases 31,500 31,500 63,000 May purchases June purchases Total disbursements $60,300 $31,500 $0 $91,800 3. Complete the following cash budget: Shilow Company Cash Budget April May June Quarter Beginning cash balance $8,900 Add cash collections 73,600 Total cash available 82,500 0 0 0 Less cash disbursements: For inventory 60,300 For expenses 18,100 For equipment 2,900 Total cash disbursements 81,300 0 0 0 Excess (deficiency) of cash 1,200 0 0 0 Financing: Borrowings Repayments Interest Total financing 0 0 0 0 Ending cash balance $1,200 $0 $0 $0 4. Prepare an absorbtion 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

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