Electronics Microsoft l Employer certifications Ottawa Study 2018 workout WVT In

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Electronics Microsoft l Employer certifications Ottawa Study 2018 workout WVT Intersession 6: Problems Saved Help Saw Problem 8-29 Completing a Master Budget (Lo8-2, Lo84, Lo8-7, Lo8-8, Lo8.-9, Lo8-10) 12.5 points The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of Harch 31: Cash $9,000 $ 26,000 $ 48,600 s 109,200 $29,175 s 150,000 s 13,625 Accounts receivable Inventory Building and equipment, net Accounts payable Common stock Retained earnings eBook Print References a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $ 65,000 $ 81,000 $ 86,000 s 111,000 $ 62,000 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, $3800 per month, other expenses (excluding depreciation), 6% Mc Graw

Explanation / Answer

Absorption cost approach Shallow Company - Income Statement For the QE June 30 Gross sales (A) $                               278,000.00 Cost of goods sold: (A) x 75% $                               208,500.00 Cost of goods sold: (B) $                               208,500.00 Gross profit (A-B) $                                  69,500.00 Less:- Commission (A) x 12% $                                  33,360.00 Rent ($3,800 x 3) $                                  11,400.00 Other expenses (A) x 6% $                                  16,680.00 Depreciation ($819 x 3) $                                    2,457.00 Interest on loan borrowed (2,000 x 1% x 3) / 12 $                                            5.00 Selling and admin expenses (C) $                                  63,902.00 Net Income (D= A-B-C) $                                    5,598.00

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