f.PROBLEM 8-29 Completing a Master Budget LOB-2, LOB-4, LOB-7, LOB-B, LOB-9, LOB-10The following data relate to the operations of Shilow Company, a wholesale distributor of con-sumer goods:g.h.b. Actual and budgeted sales data:a. The gross margin is 25% of sales.c.d.e.One-half of a month's inventory purchases is paid for in the month of purchase; the other halfis paid for in the following month. The accounts payable at March 31 are the result of Marchpurchases of inventory.Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500 per month; otherexpenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly.Depreciation is $900 per month (includes depreciation on new assets).Equipment costing $1.500 will be purchased for cash in April.Management would like to maintain a minimum cash balance of at least $4,000 at the endof each month. The company has an agreement with a local bank that allows the company toborrow 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 assumethat interest is not compounded. The company would, as far as it is able, repay the loan plusaccumulated interest at the end of the quarter.Cash salesCredit sales..Total collections.Current assets as of March 31:CashAccounts receivable.2. Complete the following:Inventory...........Building and equipment, net..Accounts payable.Common stock.Retained earings.Sales are 60% for cash and 40% on credit. Credit sales are collected in the month followingsale. The accounts receivable at March 31 are a result of March credit sales.March (actual).April..Required:Using the preceding data:1. Complete the following schedule:Schedule of Expected Cash CollectionsMayJune.JulyEach month's ending inventory should equal 80% of the following month's budgeted cost ofgoods sold.Merchandise Purchases BudgetMarch purchases.....April purchases..Budgeted cost of goods soldAdd desired ending inventory.Total needs...Less beginning inventory.Required purchases.....May purchases..June purchases..Total disbursementsCash Budget*For April sales: $60,000 sales x 75% cost ratio= $45,000.*$54.000 x 80%-$43,2001. Complete the following cash budget:Beginning cash balance...Add cash collections.....Total cash available.Less cash disbursements:For inventory..For expenses.For equipment.Total cash disbursementsExcess (deficiency) of cashFinancing:Etc.April$36,00020,000$56,000$50,000$60,000$72,000$90,000$48,000Schedule of Expected Cash Disbursements-Merchandise PurchasesMay88,20036,000$52,200AprilMay$45,000 $54,00043,200$47,850MayApril$21,75026,100 $26,100$8,000$20,000$36,000$120,000$21,750$150,000$12,250April$8,00056,00064,00047,85013,3001,50062,6501,350MayJuneJuneJuneJuneQuarterQuarterQuarter$21,75052,200Quarter 3. Complete the following cash budget:Cash BudgetBeginning cash balance......Add cash collections.....Total cash available.....Less cash disbursements:For inventory.....For expenses..For equipment....Total cash disbursementsExcess (deficiency) of cash....Financing:Etc.April$8,00056,00064,00047,85013,3001,50062,6501,350MayJune Quarter||4.Using Schedule 9 as your guide, prepare an absorption costing income statement for the quar-ter ended June 30.5. Prepare a balance sheet as of June 30.

Budgeted Financial Statement: Budgeted financial statements offer information about a company's…

b. C. e. f - h. PROBLEM 8-29 Completing a Master Budget LOB-2, LOB-4, LOB-7, LOB-B, LOB-S, LOB-10 The following data relate to the operations of Shilow Company, a wholesale distributor of con- sumer goods: a. The gross margin is 25% of sales. Actual and budgeted sales data: 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. Current assets as of March 31: Cash Cash sales Credit sales.. Total collections...... Accounts receivable. Inventory... Building and equipment, net. Accounts payable. 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. 2. Complete the following: Common stock.. Retained eamings. 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). Required: Using the preceding data: 1. Complete the following schedule: March (actual).. April. May June... July Equipment costing $1,500 will be purchased for cash in April. 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. Schedule of Expected Cash Collections Total needs.... Less beginning inventory.. Required purchases Merchandise Purchases Budget Budgeted cost of goods sold Add desired ending inventory. March purchases.. April purchases.. May purchases. June purchases.. Total disbursements Cash Budget Beginning cash balance. Add cash collections.... Total cash available. Less cash disbursements: "For April sales: $60,000 sales x 75% cost ratio-$45.000. $54.000 x 80%-$43,200 1. Complete the following cash budget: For inventory.. For expenses.. For equipment... Total cash disbursements Excess (deficiency) of cash Financing: Etc. $50,000 $60,000 $72,000 $90,000 $48.000 April $36,000 20,000 $56,000 Schedule of Expected Cash Disbursements-Merchandise Purchases May 88,200 36,000 $52,200 April May $45,000* $54.000 43,200 $47,850 $8,000 $20,000 $36,000 $120,000 $21,750 $150,000 $12,250 May April $21,750 26,100 $26,100 April $8,000 56,000 64,000 47,850 13,300 1,500 62,650 1,350 May June June June June Quarter Quarter Quarter $21,750 52,200 Quarter