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

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
Accounts receivable	$20,000
Inventory	$36,000
Buildings and equipment, net	$120,000
Accounts payable	$21,750
Capital stock	$150,000
Retained earnings	$12,250

a. The gross margin is 25% of sales.

b. Actual and budgeted sales data:

March (actual)	$50,000
April	$60,000
May	$72,000
June	$90,000
July	$48,000

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, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets.)

g. Equipment costing $1,500 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.

Requirement 1:

Complete the following schedule using the above data. (Omit the "$" sign in your response.)

Schedule of Expected Cash Collections
	April	May	June	Quarter
Cash sales	$36,000	$	$	$
Credit sales	20,000
Total collections	$56,000	$	$	$

Requirement 2:

Complete the following using the above data. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit the "$" sign in your response.)

Merchandise Purchases Budget
	April	May	June	Quarter
Budgeted cost of goods sold	$45,000	$54,000	$	$
Add desired ending inventory	43,200
Total needs	88,200
Less beginning inventory	36,000
Required purchases	$52,200	$	$	$

 

Schedule of Expected Cash Disbursements—Merchandise Purchases
	April	May	June	Quarter
March purchases	$21,750	$	$	$21,750
April purchases	26,100	26,100		52,200
May purchases
June purchases
Total disbursements	$47,850	$	$	$

Requirement 3:

Complete the following using the above data. (Omit the "$" sign in your response.)

Schedule of Expected Cash Disbursements—Selling and Administrative Expenses
	April	May	June	Quarter
Commissions	$7,200	$	$	$
Rent	2,500
Other expenses	3,600
Total disbursements	$13,300	$	$

Requirement 4:

Complete the following cash budget using the above data. (Leave no cells blank - be certain to enter "0" wherever required. Show deficiencies, repayments, Interest and total financing preceded by a minus sign wherever appropriate. Enter all other amounts as positive values. Omit the "$" sign in your response.)

Cash Budget
	April	May	June	Quarter
Cash balance, beginning	$8,000	$	$	$
Add cash collections	56,000
Total cash available	64,000
Less cash disbursements:
For inventory	47,850
For expenses	13,300
For equipment	1,500
Total cash disbursements	62,650
Excess (deficiency) of cash	1,350
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance, ending	$	$	$	$

Requirement 5:

Prepare an absorption costing income statement, for the quarter ended June 30. (Input all amounts as positive values. Omit the "$" sign in your response.)

Shilow Company Income Statement For the Quarter Ended June 30
(Click to select) Beginning inventory Goods available for sale Office expenses Sales Depreciation Ending inventory		$
Cost of goods sold:
(Click to select) Depreciation Office expenses Beginning inventory Ending inventory Goods available for sale Purchases	$
(Click to select) Add Less : (Click to select) Depreciation Administrative expenses Ending inventory Purchases Beginning inventory Office expenses
(Click to select) Office expenses Ending inventory Depreciation Purchases Beginning inventory Goods available for sale
(Click to select) Less Add : (Click to select) Administrative expenses Beginning inventory Purchases Ending inventory Office expenses Depreciation
(Click to select) Gross profit Gross loss
Selling and administrative expenses:
(Click to select) Other expenses Commissions Ending inventory Rent Beginning inventory Depreciation
(Click to select) Commissions Rent Ending inventory Beginning inventory Other expenses Depreciation
(Click to select) Other expenses Rent Beginning inventory Depreciation Ending inventory Commissions
(Click to select) Commissions Ending inventory Beginning inventory Rent Other expenses Depreciation
(Click to select) Net operating income Net operating loss
(Click to select) Less Add : (Click to select) Depreciation Budgeted cost of goods sold Beginning inventory Ending inventory Office expenses Interest expense
(Click to select) Net income Net loss		$

Requirement 6:

Prepare a balance sheet as of June 30. (Omit the "$" sign in your response.)

Shilow Company Balance Sheet June 30
Assets			Liabilities and Equity
Current assets:
(Click to select) Accounts receivable Inventory Sales Cash Accounts payable	$		(Click to select) Accounts receivable Inventory Bank loan payable Cash Accounts payable		$
(Click to select) Sales Accounts receivable Accounts payable Cash Inventory
(Click to select) Cash Accounts payable Accounts receivable Sales Inventory			Stockholders' equity:
Total current assets			(Click to select) Capital stock Retained earnings Accounts payable Inventory Accounts receivable	$
(Click to select) Current assets Building and equipment-net Cash Accounts receivable Inventory			(Click to select) Capital stock Accounts receivable Retained earnings Inventory Accounts payable
Total assets		$	Total liabilities and equity		$

 TUTORIAL PREVIEW

1.   Schedule of expected cash collections:

	April	May	June	Quarter
Cash sales........................................	$36,000	$43,200	$54,000	$  133,200
Credit sales*....................................	20,000	42,000	28,800	72,800
Total collections.............................	$56,000	$74,000	$82,800	$206,000

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