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 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 63,000 $ 79,000 $ 84,000 $ 109,000 $ 60,000 Required: 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 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, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets). g. Equipment costing $2,800 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 1 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. Complete this question by entering your answers in the tabs below. Cash sales Credit sales Total collections $ 8,800 $ 25,200 $ 47,400 $ 114,000 $ 28,425 Required 2 Required 3 Required 4 Required 5 Complete the schedule of expected cash collections. $ 150,000 $ 16,975 Schedule of Expected Cash Collections May June April $ 47,400 25,200 $72,600 Required 11 Required 2 Required 3 March purchases April purchases May purchases June purchases Total disbursements Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Quarter Required 4 Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases. Merchandise Purchases Budget Required 5 April May $59,250 $63,000 50,400 109,650 47,400 $ 62,250 Required purchases Budgeted cost of goods sold for April = $79,000 sales x 75% = $59,250. Add desired ending inventory for April = $63,000 × 80% = $50,400. Schedule of Expected Cash Disbursements-Merchandise Purchases June April $ 28,425 May June 31,125 31,125 Quarter Quarter $ 28,425 62,250