value 8.00 polnts The following data relate to the operations of Shilow Company,

Question

value 8.00 polnts The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods Current assets as of March 31: Cash S 9.000 S 26,000 $ 48,600 s 109,200 S 29,175 150,000 s 13,625 Accounts receivable Inventory Building and equipment, net Accounts payable Capital stock Retained earnings The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $65,000 $81,000 $88,000 $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 s paid for in the month of purchase: the other half is paid for f. Montny expenses are as follows: commissions, 12% of sales, rent, s3.800 per month: other expenses 2. Equipment costing $3,000 will be purchased for cash in Apri in the following month. The accounts payable at March 31 are the resuit of March purchases of inventory (excluding deprec. aton). 0% of sales. Assume that these expenses are paid monthly. Depreciation is 5810 per month (includes depreciation on new assets) h. Management would like to mainta n a minimum cash balance of at east 84.000 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 interes rate on these ioans is 1% per month and for s melony we we: 3ssume that interest is no: compounded The company would, as far as it is abe repay the loan plus accumulated interest at the end of the quaner Required Using the data 3bove 1 Complate the following schedu e Search the web and Windows

Explanation / Answer

1) Shilow company Schedule of Expected cash collections April May June Quarter Cash sales 48600 51600 66600 166800 credit sales 26,000 32400 34400 92,800 total collections 74600 84000 101000 259600 Accounts receivable = 111000*40%= 44,400 2) Merchandise purchase budget April May June Quarter Budgeted cost of goods sold 60750 64500 83250 208500 46500 Add Desired ending inventory 51600 66600 37,200 37,200 total needs 112350 131100 120450 245700 less beginning inventory 48,600 51,600 66,600 48,600 Required purchases 63,750 79,500 53,850 197,100 cost of goods sold = 75% of sales ending inventory = 80% of following months budgeted cost of goods sold 3) Schedule of Cash disbursements-Merchandise purhcase April May June Quarter March purchases 29,175 29,175 April purchases 31875 31,875 63750 May purchases 39750 39,750 79500 June purchases 26925 26925 total disbursements 61,050 71625 66675 199,350 Accounts payable june 30 = 26,925 4) Cash budget April May June Quarter Beginning cash balance 9,000 4,170 4,265 9,000 Add Cash collectiosn 74600 84000 101000 259600 total cas h available 83,600 88,170 105,265 268,600 less cash disbursements for inventory 61,050 71625 66675 199,350 for expenses 18380 19280 23780 61440 for equipment 3,000 0 0 3,000 total cash disbursements 82,430 90905 90455 263,790 Excess(Deficiency)of cash 1,170 -2,735 14,810 4,810 Financing: Borrowings 3,000 7,000 0 10,000 Repayments 0 -10,000 -10,000 interest 0 -230 -230 total financing 3,000 7,000 -10230 -230 Ending cash balance 4,170 4,265 4,580 4,580 interest = 3000*1%*3= 90 7000*1%*2= 140 230 5) income statement Sales 278000 cost of goods sold Beginning inventor 48,600 Add purchases 197,100 goods available for sale 245,700 ending inventory 37,200 208,500 Gross margin 69,500 Selling and administrative expense commissions 33360 rent (3800*3) 11400 Depreciation (819*3) 2457 other expenses 16680 63897 net operating 5,603 interest expense 230 net income 5,373 Balance sheet Assets current assets Cash 4,580 Accounts receivable 44,400 inventory 37,200 total current assets 86,180 Building And equipment ,net (109200+3000-2457) 109743 total Assets 195,923 liabilities And stockholder 's Equity Accounts payable 26,925 total current liabilities 26,925 Stockholder's Equity Capital stock 150,000 Retained earnings 18,998 168,998 total liabilites & stockholders Equity 195,923

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