Merchandise Purchases Budget Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Required purchases April $ 48,000 May 51,750 June Quarter 41.400 89.400 38,400 $ 51,000 Budgeted cost of goods sold for April = $64,000 sales × 75% = $48,000. Add desired ending inventory for April = $51,750 × 80% = $41,400 Schedule of Expected Cash Disbursements-Merchandise Purchases March purchases April purchases May purchases June purchases Total disbursements April May $ 22.800 25,500 25.500 EGUER June Quarter 22,800 51,000 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

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...
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Merchandise Purchases Budget
Budgeted cost of goods sold
Add desired ending merchandise inventory
Total needs
Less beginning merchandise inventory
Required purchases
April
$ 48,000
May
51,750
June
Quarter
41.400
89.400
38,400
$
51,000
Budgeted cost of goods sold for April = $64,000 sales × 75% = $48,000.
Add desired ending inventory for April = $51,750 × 80% = $41,400
Schedule of Expected Cash Disbursements-Merchandise Purchases
March purchases
April purchases
May purchases
June purchases
Total disbursements
April
May
$
22.800
25,500
25.500
EGUER
June
Quarter
22,800
51,000
Transcribed Image Text:Merchandise Purchases Budget Budgeted cost of goods sold Add desired ending merchandise inventory Total needs Less beginning merchandise inventory Required purchases April $ 48,000 May 51,750 June Quarter 41.400 89.400 38,400 $ 51,000 Budgeted cost of goods sold for April = $64,000 sales × 75% = $48,000. Add desired ending inventory for April = $51,750 × 80% = $41,400 Schedule of Expected Cash Disbursements-Merchandise Purchases March purchases April purchases May purchases June purchases Total disbursements April May $ 22.800 25,500 25.500 EGUER June Quarter 22,800 51,000
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
Transcribed Image Text: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
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