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 Connon stock Retained earnings $ 7,200 $ 18.800 $ 37.800 $ 123.668 $ 22.425 $ 150. eee $ 14,975 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual ) April $ 47.000 $ 63.000 $ 68.000 $ 93. $ 44, eee July 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. $2,000 per month; other expenses (excluding depreciation). 6% of sales. Assume that these expenses are paid monthly. Depreciation is $927 per month (Includes depreciation on new assets). g. Equipment costing $1,200 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 preceding data: 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections. Quarter Schedule of Expected Cash Collections April May June Cash sales $ 37,800 Credit sales 18.800 Total collections $ 58,600 $ 0 $ 0 $ 0 Required 1 Required 2 >

Answer 1

Calculation April Shilow Company Schedule of expected cash collections Req 1 Cash sales Credit sales Total collections =63,000*60% April 37,800 18,800 56,600 40,800 25,200 66,000 June 55,800 27,200 83,000 Quarter Quarter 134,400 71,200 205,600 May =68,000*60% =63,000*40% June =93,000*60% =68,000*40% Inventory Purchase budget Req 2a Budgeted Cost of goods sold Add Desired Ending Inventory Total Needs Less Beginning Inventory Required Purchases April =63,000*75% =51,000*80% May =68,000*75% =69,750*80% June =93,000*75% -44,000*75%*80% April 47,250 40,800 88,050 37,800 50,250 May 51,000 55,800 106,800 40,800 66,000 June 69,750 26,400 96,150 55,800 40,350 Quarter 168,000 26,400 194,400 37,800 156,600 From Balance Sheet End Inv of April End Inv of May June April May June Schedule of expected cash discursements-Purchases Reg 2b April May Mar Purchases 22,425 April Purchases 25,125 25,125 May Purchases 33,000 June Purchases Total disbursements for purchases 47,550 58,125 =50,250/2 Quarter 22,425 50,250 66,000 20,175 158,850 =50,250/2 =66,000/2 33,000 20,175 53,175 =66,000/2 -40,350/2 April May June April May 7,200 4,000 56,600 66,000 63,800 70,000 June 4,000 83,000 87,000 Quarter 7,200 205,600 212,800 58,125 14,240 53,175 18,740 =163,000*(12%+6%)) +2,000 =(68,000*(12%+6%)) +2,000 =(93,000*(12%+6%)) +2,000 Cash budget Req3 Cash balance, beginning Add Cash collections Total cash available Less cash disbursements For Inventory For expenses For equipment Total Cash disbursements Excess (deficiency) of cash Financing Borrowings Repayments Interest Total financing Cash balance, ending 47,550 13,340 1,200 62,090 1,710 158,850 46,320 1,200 206,370 6,430 72,365 (2,365) 71,915 15,085 2,290 6,365 =4,000-1,710 -4,000-(-2,365) 8,655 (8,655) (196) (196) 6,234 (8,655) (196) (8,851) 6,234 =(2,290*1%*3)+6,365*1%*2) 2,290 4,000 6,365 4,000

224,000 =63,000+68,000+93,000 From Balance Sheet From Purchase Budget 37,800 156,600 194,400 (26,400) From Purchase Budget Income Statement Req4 Sales Cost of goods sold Beginning Inventory Add Purchases Goods Available For Sale Ending Inventory Gross Margin Selling & Admin Expenses Commissions Rent Depreciation Other expenses Net Operating Income Interest expense Net Income 168,000 56,000 26,880 6,000 2,781 13,440 = 224,000*12% =2,000*3 =927*3 =224,000*6% 49,101 6,899 196 6,703 Balance Sheet Req5 Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Fixed Assets Building & Equipment Accumulated Dep- Building/Equip Total Fixed Assets Total Assets 6,234 37,200 26,400 =93,000*40% 69,834 124,800 (2,781) =123,600+1,200 =927*3 122,019 191,853 20,175 =40,350/2 20,175 Liabilities & Stockholders Equity Liabilities Accounts Payable Total Liabilities Stockholders Equity Capital Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 150,000 21,678 =14,975+6,703 171,678 191,853