The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:Current assets as of March 31:CashAccounts receivableInventoryBuilding and equipment, netAccounts payableCommon stockRetained earnings.a. The gross margin is 25% of sales.b. Actual and budgeted sales data:March (actual)AprilMayJuneJulyRequired:Using the preceding data:c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March31 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. Theaccounts payable at March 31 are the result of March purchases of inventory.f. Monthly expenses are as follows: commissions, 12% of sales; rent, $4,000 per month; other expenses (excluding depreciation), 6%of sales. Assume that these expenses are paid monthly. Depreciation is $783 per month (includes depreciation on new assets).g. Equipment costing $3,200 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 anagreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to atotal loan balance of $20,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is notcompounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.$ 67,000$ 83,000$ 88,000$ 113,000$ 64,000$ 9,200$ 26,800$ 49,800$ 104,4001. 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.Required 1$ 29,925$ 150,000$ 10,2754. 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 2Cash salesCredit salesTotal collections$ 49,80026,800$ 76,600Required 3 Required 4Complete the schedule of expected cash collections.Schedule of Expected Cash CollectionsAprilMayJuneRequired 5Quarter

Solution : Total Cash collections = Cash sales + collection of Credit sales Budgeted purchases =…

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.

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Calculate the expected cash collections for July. 2. Calculate the expected cash disbursements for merchandise purchases for July. 3. Prepare a cash budget for July.