The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods, as of March 31:

a. The gross margin is 25% of sales.
b. Actual and budgeted sales data are as follows:

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 die 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, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets).

g. Equipment costing $1,500 will be purchased for cash in April.

h. The company must maintain a minimum cash balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made a the end of a month. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month.

Required:

Using the data above, complete the following:

1. Schedule of expected cash collections:

2. Merchandise purchases budget:

*For April sales: $60.000 sales x 75% cost ratio = $45,000
†$54.000 x 80% = $43,200

Schedule of expected cash disbursements- Merchandise purchases:

3. Schedule of expected cash disbursements-Selling and administrative expenses:

4. Cash budget:

5. Prepare an absorption costing income statement, similar to the one shown in Schedule 9, for the quarter ended June 30.

6. Prepare a balance sheet as of June 30.

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Cash. . . . $8,000 ... Accounts receivable 20,000 Inventory.... Building and equipment, net. Accounts payable Common shares… .. Retained earnings . . 36,000 120,000 21,750 150,000 12,250 March (actual) $50,000 ... . April May.. June. 60,000 72,000 90,000 July 48,000