Question

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 $ 9, 100 $ 26,400 $ 49,200 $ 106,800 $ 29,550 $ 150,000 $ 11,950 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June Ouly $ 66,000 $ 82,000 $ 87,000 $ 112,000 $ 63,000

Answer 1

1)			Shilow company
			Schedule of Expected cash collections
			April	May	June	Quarter
Cash sales			49200	52200	67200	168600
credit sales			26,400	32800	34800	94,000
total collections			75600	85000	102000	262600
	Accounts receivable = 112000*40%=				44800
2)			Merchandise purchase budget
			April	May	June	Quarter
Budgeted cost of goods sold			61500	65250	84000	210750
Add Desired ending inventory			52200	67200	37,800	37,800
total needs			113700	132450	121800	248550
less beginning inventory			49,200	52,200	67,200	49,200
Required purchases			64,500	80,250	54,600	199,350
3)		Schedule of Cash disbursements-Merchandise purhcase
			April	May	June	Quarter
March purchases			29,550			29,550
April purchases			32250	32,250		64500
May purchases				40125	40,125	80250
June purchases					27300	27300
total disbursements			61,800	72375	67425	201,600
4)			Cash budget
			April	May	June	Quarter
Beginning cash balance			9,100	4,140	4,205	9,100
Add Cash collectiosn			75600	85000	102000	262600
total cas h available			84,700	89,140	106,205	271,700
less cash disbursements
for inventory			61,800	72375	67425	201,600
for expenses			18660	19560	24060	62280
for equipment			3,100	0	0	3,100
total cash disbursements			83,560	91935	91485	266,980
Excess(Deficiency)of cash			1,140	-2,795	14,720	4,720
Financing:
Borrowings			3,000	7,000	0	10,000
Repayments			0		-10,000	-10,000
interest			0		-230	-230
total financing			1,000	7,000	-10230	-230
Ending cash balance			4,140	4,205	4,490	4,490
	interest = 3000*1%*3=			90
		7000*1%*2=		140
				230
5)			income statement
	Sales					281000
	cost of goods sold
	Beginning inventor				49,200
	Add purchases				199,350
	goods available for sale				248,550
	ending inventory				37,800	210,750
	Gross margin					70,250
	Selling and administrative expense
	commissions				33720
	rent		(3900*3)		11700
	Depreciation		(801*3)		2403
	other expenses				16860	64683
	net operating					5,567
	interest expense					230
	net income					5,337
		Balance sheet
		Assets
		current assets
		Cash					4,490
		Accounts receivable					44,800
		inventory					37,800
		total current assets					87,090
		Building And equipment ,net					107497
		total Assets					194,587
		liabilities And stockholder 's Equity
		Accounts payable					27,300
		total current assets					27,300
		Stockholder's Equity
		Capital stock				150,000
		Retained earnings				17,287	167,287
		total liabilites & stockholders Equity					194,587