Beginning cash balance Add collections from customers Total cash available Less cash disbursements: For inventory For expenses For equipment Shilow Company Cash Budget Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance April May June Quarter $ 7,300 57,600 64,900 48.300 13,620 1,300 63,220 1.680 ima MIE והנב 171 The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31e Cash Accounts receivable Inventory E Building and equipment, net Accounts payable Retained earnings $7.300 $38,400 $ 124,898 $22,800 $ 150,000 316-999 a. The gross margin is 25% of sales. b. Actual and budgeted sales data March (actual) May July בוה 21 11 $ 48,498 $69-898 94,000 $45,898 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, $2,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $936 per month (includes depreciation on new assets). g. Equipment costing $1,300 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. ווה וו STILE
Beginning cash balance Add collections from customers Total cash available Less cash disbursements: For inventory For expenses For equipment Shilow Company Cash Budget Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Ending cash balance April May June Quarter $ 7,300 57,600 64,900 48.300 13,620 1,300 63,220 1.680 ima MIE והנב 171 The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31e Cash Accounts receivable Inventory E Building and equipment, net Accounts payable Retained earnings $7.300 $38,400 $ 124,898 $22,800 $ 150,000 316-999 a. The gross margin is 25% of sales. b. Actual and budgeted sales data March (actual) May July בוה 21 11 $ 48,498 $69-898 94,000 $45,898 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, $2,100 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $936 per month (includes depreciation on new assets). g. Equipment costing $1,300 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. ווה וו STILE
Chapter1: Financial Statements And Business Decisions
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