Question

This is for shilow company. Can you show the sales budget sheet as well. Thank you

TULUNJ UI JMOW CUMPally, 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 $ 8,500 $ 24,000 $ 45,600 $ 121,200 $ 27, 300 $ 150,000 $ 22,000 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 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, $3,300 per month: other expenses (excluding depreciation). 6% of sales. Assume that these expenses are paid monthly. Depreciation is $909 per month (includes depreciation on new assets). g. Equipment costing $2,500 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. a. The gross margin is 25% of sales. b. Actual and budgeted sales data: Required: Using the preceding data: March (actual) April May June July $ 60,000 $ 76,000 $ 81,000 $ 106,000 $ 57,000 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.

Answer 1

Answer to Part 1. Schedule of Expected Cash Collections April May 45,600 48,600 24,000 30,400 69,600 79,000 Cash Sales Collection from Credit Sales Total Cash Collections June 63,600 32,400 96,000 Quarter 157,800 86,800 244,600 Answer to Part 2. Merchandise Purchases Budget April May June Budgeted Cost of goods sold 57,000 60,750 79,500 Add: Desired Ending Inventory 48,600 63,600 34,200 Total Needs 105,600 124,350 113,700 Less: Beginning Inventory 45,600 48,600 63,600 Required Purchases 60,000 75,750 50,100 Schedule of Expected Cash Disbursements - Merchandise Purchases April May June March Purchases 27,300 April Purchases 30,000 30,000 May Purchases 37,875 37,875 June Purchases 25,050 Total Disbursements 57,300 67,875 62,925 Quarter 197,250 34,200 231,450 45,600 185,850 Quarter 27,300 60,000 75,750 25,050 188,100

Answer to Part 3. Shillow Company Cash Budget April May 8,500 4,320 69,600 79,000 78,100 83,320 June 4,565 96,000 100,565 Quarter 8,500 244,600 253,100 67,875 62,925 Beginning Cash Balance Add: Cash Collections Total Cash Available Less: Cash Disbursements For Inventory For Equipment For Expenses Total Cash Disbursements Excess (Deficiency) of Cash Financing: Borrowings Repayments Interest Total Financing Ending Cash Balance 57,300 2,500 16,980 76,780 1,320 17,880 85,755 -2,435 22,380 85,305 15,260 188,100 2,500 57,240 247,840 5,260 3,000 7,000 10,000 -10,000 -230 -10,000 -230 -10,230 5,030 -230 3,000 4,320 7,000 4,565 5,030 Interest Expense = ($3,000 * 1%*3) + ($7,000 * 1%*2) = $230

Cash Disbursements for Expenses April May Commission 9,120 9,720 Rent 3,300 3,300 Other Expenses 4,560 4,860 Total Cash Disbursements for Expenses 16,980 17,880 June 12,720 3,300 6,360 22,380 Quarter 31,560 9,900 15,780 57,240

263,000 Answer to Part 4. Shillow Company Income Statement For the Quarter Ended June 30 Sales Cost of Goods sold Beginning Inventory 45,600 Purchases 185,850 Goods available for Sale 231,450 Ending Inventory 34,200 Cost of Goods sold Gross Profit Selling and Administrative Expenses: Commission 31,560 Rent 9,900 Other Expenses 15,780 Depreciation 2,727 Total Selling and Adminitrative Expenses Net Operating Income Interest Expense Net Income 197,250 65,750 59,967 5,783 230 5,553

Answer to Part 5. Shilow Company Balance Sheet June 30 Assets Current Assets: Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Building and Equipment, Net Total Assets 5,030 42,400 34,200 81,630 120,973 202,603 25,050 Liabilities and Stockholders' Equity Liabilities: Accounts Payable 25,050 Total Liabilities Stockholders' Equity Common Stock 150,000 Retained Earnings 27,553 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 177,553 202,603

Calculation:
Accounts Receivable = $106,000 * 40% = $42,400
Building and Equipment, Net = $121,200 + $2,500 - $2,727 = $120,973
Retained Earnings = $22,000 + $5,553 = $27,553