0 |Oezto.mheducationcom/hm.tpx 10.00 ponts The following data relate to the oper

Question

0 |Oezto.mheducationcom/hm.tpx 10.00 ponts The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31 Cash $ 8,000 s 20,000 S 36,000 $ 120,000 21.750 $ 150,000 $ 12.250 Building and equipment, net Accounts payable Capital stock a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) Apri May June July 550,000 $80,000 $72,000 $00,000 $48.000 Sales are 60% for cash and 40% on credt Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March eredit sales Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold C. d. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other haif is paid for t Monthly expenses are as follows oommssions. 12% cf sales: rent $2.500 per month: Other epenses g Equipment costing $1.500 will be purchased for cash in April in the following month. The accounts payable at March 31 are the resut of March purchases of inventory leccluding depreciation), 6% of sales Assume that these expenses are pad monthly Depreciation i $000 per month (inoludes depreciation on new assets) h. Management would ike 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 data above 1. Complete the following sohedue Schedule of Expected Cash Collections Apri Jure Quarter O Type here to search

Explanation / Answer

EXPECTED CASH COLLECTIONS APRIL MAY JUNE QUARTER Cash sales 36,000 43200 54000 133,200 March month Accounts receivable 20,000 20,000 April Month Sales 24000 24,000 May Month Sales 28,800 28,800 June Month sales 0 0 Total Cash Collections 56,000 67,200 82,800 206,000 RAW MATERIAL PURCHASE BUDGET APRIL MAY JUNE QUARTER Budgeted Cost of Goods sold 45,000 54,000 67,500 166,500 Add: Desired Ending Inventory 43,200 54,000 28,800 28,800 Total needs 88,200 108,000 96,300 195,300 Less: Beginning Inventory 36,000 43,200 54,000 36,000 Budgeted Purchase in $ 52,200 64,800 42,300 159,300 EXPECTED CASH PAYMENTS APRIL MAY JUNE YEAR Beginning Accounts payable 21,750 21,750 April month purchases 26100 26100 52,200 May month purchases 32400 32400 64,800 June Month Purchases 21150 21,150 Total Cash disbursement 47,850 58,500 53,550 820,000 Note: Computation of March Accounts payable at the end: March cost of Goods sold 37500 Add: ending Invenntory 36000 Less: beginning Inventory 30000 Purchases 43500 Half Credit purchases 21750

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