Question

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash 8,000 20,000 $ 36,000 $ 120,000 $ 21,750 150,000 $12,250 $ Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April Мay June 50,000 $ 60,000 72,000 90,000 48,000 July

Answer 1

Solutions:

D Е G Н 4 Schedule of expected cash collections 5 April $60,000.00 $72,000.00 $90,000.00 $222,000.00. 6 Particulars June Quarter May Budgeted Sales 7 8 $36,000.00 $43,200.00 $54,000o.00 $133,200.00 $20,000.00 $24,000.00 $28,800.00 $72,800.00 Cash Sale 9 Collection for credit sales 10 11 $56,000.00 $67,200.00 $82,800.00 $206,000.00 Total Collections 12 13 14 15 Merchandise Purchase Budget 16 Particulars April $45,000.00 $54,000.00 $67,500.00 $166,500.00 Quarter May June Budgeted Cost of Goods Sold (75% of Sales) Add: Desired ending merchandise invent ory (80% of next month COGS) 17 18 $43,200.00 $54,000.00$28,80o.00 $28,800.00 $8,200.00 $108,000.00 $96,300.00 $195,300.00 $36,000.00 $43,200.00 $54,000.00 $36,000.00 Tot al Needs 19 Less: Beginning invent ory 20 21 $52,200.00 $64,800.00 $42,300.00 $159,300.00 Required purchases 22 23 24 25 Schedule of expected cash disbursement -Merchandise Purchases April $21,750.00 $26,100.00 $26,100.00 26 Particulars Quarter Мay June March Purchases April Purchases May Purchases June Purchases $21,750.00 27 $52,200.00 28 $32,400.00 $32,400.00 $64,800.00 $21,150.00 $21,150.00 29 30 31 $47,850.00 $58,500.00 $53,550.00 $159,900.00 Total Disbursement 32 33 Cash Budget -Shilow company April $8,000.00 34 Particulars 35 May $4,000.00 June Quarter Opening Cash balance Add: Collection from cust omers $4,000.00 $8,000.00 36 $56,000.00 $67,200.00 $82,800.00 $206,000.00 $64,000.00 $71,200.00 $86,800.00 $214,000.00 37 Tot al Cash Available Less-Cash Disbursement: For Invent ory 38 39 $47,850.00 $58,500.00$53,550.00 $159,900.00 $13,300.00 $15,460.00 $18,700.00 $47,460.00 40 For Expenses For Equipment Tot al Cash disbursement 41 $1,500.00 $0.00 $0.00 $1,500.00 42 $62,650.00 $73,960.00 $72,250.00 $208,860.00 43 44 Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments 45 -$2,760.00 $14,550.00 $5,140.00 $1,350.00 46 $2,650.00 $0.00 $0.00 $2,650.00 $4,000.00 $6,760.00 $0.00 -$9,410.00 $9,410.00 -$214.70 $9,410.00 47 $0.00 48 $0.00 -$214.70 Interest Total Financing Ending cash balance 49 $6,760.00 $4,000.00 $9,624.70 $4,925.30 $214.70 $4,925.30 50 51 52 Schedule of expected cash disbursement of operating expenses 53 April $7,200.00 54 Particulars May June Quarter $8,640.00 $10,800.00 $26,640.00 $2,500.00 $5,400.00 $13,320.00 Salaries and wages 55 Rent $2,500.00 $3,600.00 $2.500.00 $7,500.00 56 Other expenses $4,320.00 57 58 $13,300.00 $15,460.00 $18,700.00 $47,460 .00 Tot al Disbursement 59 8) Sheet85 (25) Sheet406 (2) Sheet236 (3) Sheet540 Sheet

L М P 31 32 33 34 Absorption costing income statement Shilow Company 35 for quarter ended June 30 Particulars 36 Amount Sales Cost of goods sold (75%) Gross profit Operating expenses: Sales commission $222,000.00 $166,500.00 $55,500.00 37 38 39 40 $26,640.00 41 Rent Other expenses $7,500.00 $13,320.00 42 43 Depreciation(900*3) $2,700.00 44 45 Total operating expenses $50,160.00 $5,340.00 Operating income Interest expense 46 $214.70 47 48 $5,125.30 Net Income 49 50 51 52 Balance Sheet- Shilow Company 53 54 30-Jun Particulars 55 Amount Assets: 56 Cash Accounts receivables ($90,000*40%) $4,925.30 57 $36,000.00 58 $28,800.00 59 Inventory Building and equipment, net ($120,000 +$1500 $2700) Total Assets 60 $118,800.00 $188,525.30 61 62 Liabilities and stockholder's Equity: Accounts payable (42300*50%) 63 $21,150.00 64 $150,000.00 Common Stock 65 Retained Earnings ($12250 $5125.30) Total liabilities and stockholders equity $17,375.30 66 $188,525.30 67 68 69 70 71 72 73 74 8) Sheet85 (25) Sheet406 (2) Sheet236 (3) Sheet540 Sheet II