The following data relate to the operations of Shilow Company, a wholesale distr

Question

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer Current assets as of Harch 31 Cash Accounts receivable Inventory $ 7,500 20,000 39,600 127,200 s 23,550 150,000 20,750 Building and eguipment, net Accounts payable Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales deta: Hareh (actual April May June July 50,000 s 66,000 71,000 96,000 47,000 March Sales are 60% for cash and 40%on credit. Credit sales are collected in the month following sale. The accounts receivable at 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. c. inventory purchases is paid for in the month of purchase; the other haif is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory c. Sales are 60% for cash and 40% on cred

Explanation / Answer

Merchandise Purchase Budget April May June Total Budgeted cost of goods sold 49500   [66000*.75] 53250   [71000*.75] 72000 [96000*.75] 174750 Desired ending inventory 42600   [53250*.80] 57600   [72000*.80] 28200   [47000*.75*.80] 128400 Total needs 92100 110850 100200 303150 Less:beginning inventory (39600) (42600) (57600) (139800) Required purchase 52500 68250 42600 163350 Schedule of cash disbursement -merchandise purchase April May June quarter March purchase 23550 April 26250   [52500*1/2] 26250 may 34125   [68250*1/2] 34125 june 21300 [426001/2] Total disbursement 49800 60375 55425 165600

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