Please answer the first 3 parts - req 1, 2 and 3 according to the images attached Problem 8-29 (Algo) Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash$ 7,300Accounts receivable$ 19,200Inventory$ 38,400Building and equipment, net$ 124,800Accounts payable$ 22,800Common stock$ 150,000Retained earnings$ 16,900 The gross margin is 25% of sales.Actual and budgeted sales data: March (actual)$ 48,000April$ 64,000May$ 69,000June$ 94,000July$ 45,000 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.Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.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.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).Equipment costing $1,300 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. 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. Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Req #3 Shilow CompanyCash Budget AprilMayJuneQuarterBeginning cash balance$7,300 Add collections from customers57,600 Total cash available64,900 Less cash disbursements: For inventory48,300 For expenses13,620 For equipment1,300 Total cash disbursements63,220 Excess (deficiency) of cash available over disbursements1,680 Financing: Borrowings Repayments Interest Total financing Ending cash balance **Merchandise Purchases Budget and Schedule of Expected Cash Disbursements**This educational content provides an overview of how to complete a merchandise purchases budget and the associated schedule of expected cash disbursements. The data is organized into two main tables, each detailing a part of the budgeting process.### Merchandise Purchases Budget**April:**- **Budgeted cost of goods sold**: $48,000- **Add desired ending merchandise inventory**: $41,400- **Total needs**: $89,400- **Less beginning merchandise inventory**: $38,400- **Required purchases**: $51,000**May:**- **Budgeted cost of goods sold**: $51,750- Values for desired ending merchandise inventory, total needs, beginning merchandise inventory, and required purchases are not filled out.**June and Quarter:**- No values are provided for June and quarterly figures in this section.**Additional Information:**- The budgeted cost of goods sold for April is calculated from 75% of $64,000 sales, which equals $48,000.- Desired ending inventory for April is based on 80% of $51,750, equating to $41,400.### Schedule of Expected Cash Disbursements—Merchandise Purchases**April:**- **March purchases**: $22,800- **April purchases**: $25,500**May:**- **March purchases**: $22,800- **April purchases**: $25,500- **May purchases**: The value for May purchases is not filled out.**June and Quarter:**- Values for June purchases and total disbursements for the quarter are not specified.This structured approach helps in understanding how companies plan their merchandise purchases and manage cash flows related to purchasing activities. Each table and value is a critical component in forecasting and financial planning within a business setting. **Assignment Instructions:**Using the preceding data, perform the following tasks: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.**Instructions:**Complete this question by entering your answers in the tabs below.**Tabs:**- Required 1- Required 2- Required 3- Required 4- Required 5**Task:**Complete the schedule of expected cash collections.**Table: Schedule of Expected Cash Collections**| | April | May | June | Quarter ||----------------------|--------|-----|------|---------|| **Cash sales** | $38,400| | | || **Credit sales** | $19,200| | | || **Total collections**| $57,600| | | |**Navigation:**- Left arrow to "Required 1"- Right arrow to "Required 2"

In this question, we need to prepare for the period April - June the following: Schedule of…

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,300 Accounts receivable $ 19,200 Inventory $ 38,400 Building and equipment, net $ 124,800 Accounts payable $ 22,800 Common stock $ 150,000 Retained earnings $ 16,900 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual) $ 48,000 April $ 64,000 May $ 69,000 June $ 94,000 July $ 45,000 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. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold. 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. 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). Equipment costing $1,300 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. 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.

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,300 Accounts receivable $ 19,200 Inventory $ 38,400 Building and equipment, net $ 124,800 Accounts payable $ 22,800 Common stock $ 150,000 Retained earnings $ 16,900 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual) $ 48,000 April $ 64,000 May $ 69,000 June $ 94,000 July $ 45,000 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. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold. 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. 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). Equipment costing $1,300 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. 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.

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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Problem 8-29 (Algo) Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]

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

Current assets as of March 31:
Cash	$ 7,300
Accounts receivable	$ 19,200
Inventory	$ 38,400
Building and equipment, net	$ 124,800
Accounts payable	$ 22,800
Common stock	$ 150,000
Retained earnings	$ 16,900

The gross margin is 25% of sales.
Actual and budgeted sales data:

March (actual)	$ 48,000
April	$ 64,000
May	$ 69,000
June	$ 94,000
July	$ 45,000

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.
Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.
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.
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).
Equipment costing $1,300 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.

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.

Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)

Req #3

Shilow Company
Cash Budget
	April	May	June	Quarter
Beginning cash balance	$7,300
Add collections from customers	57,600
Total cash available	64,900
Less cash disbursements:
For inventory	48,300
For expenses	13,620
For equipment	1,300
Total cash disbursements	63,220
Excess (deficiency) of cash available over disbursements	1,680
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance

**Merchandise Purchases Budget and Schedule of Expected Cash Disbursements**

This educational content provides an overview of how to complete a merchandise purchases budget and the associated schedule of expected cash disbursements. The data is organized into two main tables, each detailing a part of the budgeting process.

### Merchandise Purchases Budget

**April:**
- **Budgeted cost of goods sold**: $48,000
- **Add desired ending merchandise inventory**: $41,400
- **Total needs**: $89,400
- **Less beginning merchandise inventory**: $38,400
- **Required purchases**: $51,000

**May:**
- **Budgeted cost of goods sold**: $51,750
- Values for desired ending merchandise inventory, total needs, beginning merchandise inventory, and required purchases are not filled out.

**June and Quarter:**
- No values are provided for June and quarterly figures in this section.

**Additional Information:**
- The budgeted cost of goods sold for April is calculated from 75% of $64,000 sales, which equals $48,000.
- Desired ending inventory for April is based on 80% of $51,750, equating to $41,400.

### Schedule of Expected Cash Disbursements—Merchandise Purchases

**April:**
- **March purchases**: $22,800
- **April purchases**: $25,500

**May:**
- **March purchases**: $22,800
- **April purchases**: $25,500
- **May purchases**: The value for May purchases is not filled out.

**June and Quarter:**
- Values for June purchases and total disbursements for the quarter are not specified.

This structured approach helps in understanding how companies plan their merchandise purchases and manage cash flows related to purchasing activities. Each table and value is a critical component in forecasting and financial planning within a business setting.

**Assignment Instructions:**

Using the preceding data, perform the following tasks:

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.

**Instructions:**

Complete this question by entering your answers in the tabs below.

**Tabs:**

- Required 1
- Required 2
- Required 3
- Required 4
- Required 5

**Task:**

Complete the schedule of expected cash collections.

**Table: Schedule of Expected Cash Collections**

| | April | May | June | Quarter |
|----------------------|--------|-----|------|---------|
| **Cash sales** | $38,400| | | |
| **Credit sales** | $19,200| | | |
| **Total collections**| $57,600| | | |

**Navigation:**

- Left arrow to "Required 1"
- Right arrow to "Required 2"

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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