Following is selected information relating to the operations of Shilow Company, a wholesale distributor:

Current assets as of March 31:
Cash	$	32,000
Accounts receivable		44,000
Inventory		79,200
Plant and equipment, net		202,000
Accounts payable		63,200
Capital shares		270,000
Retained earnings		24,000

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

March (actual)	$	110,000
April		132,000
May		144,000
June		162,000
July		108,000

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.	At the end of each month, inventory is to be on hand equal to 80% of the following month’s sales needs, stated at cost.
e.	One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. The accounts payable at March 31 are a result of March purchases of inventory.
f.	Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $7,000 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $2,100 per month (includes depreciation on new assets).
g.	Equipment costing $2,700 will be purchased for cash in April.
h.	The company must maintain a minimum cash balance of $8,000. 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 at the end of a month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principal; figure interest on whole months (1/12, 2/12, and so forth).

Required:

Using the preceding data:

1.

Prepare a schedule of expected cash collections.

2.	Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases.

3.	Prepare a schedule of expected cash disbursements for operating expenses.

4.	Prepare a cash budget by month and for the quarter in total. (Any "Repayments" should be indicated by a minus sign.)

5. Prepare an income statement for the quarter ended June 30.

6. Prepare a balance sheet as of June 30.

 

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Required: Using the preceding data: 1. Prepare a schedule of expected cash collections SHILOW COMPANY 5. Prepare an income statement for the quarter ended June 30. Schedule of Expected Cash Collections April May June Quarter Cash sales $ 79.200 $ B6,400 s 97.200 s 262,800 57,600 64,800 $ 104.400 S 144.000 $ 162.000 SHILOW COMPANY Credit sales 25,200 147,600 Income Statement Total cash collections 410,400 For the Quarter Ended June 30 Deduct: Cost of goods sold: 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. Goods available for sale SHILOW COMPANY Schedule of inventory Purchases April May June Quarter s 99,000 s 108,000S 121,500 Actual cost of goods sold Add: Desired ending inventory Total needs Deduct: Beginning inventory 328,5 97.200 205,200 82.200 $ 106.200s 123.000 s 89,100 s 318.3 86,400 64,800 248,4 Deduct: Operating expenses: 185,400 186,300 576.9 79,200 97,200 258,6 Actual purchase SHILOW COMPANY Schedule of Expected Cash Disbursements for Purchases April May June Quarter March purchases S 63.200 S 63.200 65900 85.900 131,800 147.550 Aprit purchases May purchases June purchases 73,775 73,775 60,950 60,950 Total cash disbursements S 120.100 S 130,675 $ 134,725 $ 403,500 6. Prepare a balance sheet as of June 30. 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY SHILOW COMPANY Balance Sheet Schedule of Expected Cash Disbursements for Operating Expenses as of June 30 April May June Quarter Assets -s 16.84Os 17.280 S 19,440 7.000 S 52.560 21,000 6.480 Salaries and wages Current assets: Rent 7,000 7,000 Other expenses 7,020 8.640 9,720 Total cash disbursements 30.760 S 32,920 $ 32,920 S 36, 160 S 80,040 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interestr should be indicated by a minus sign) Total current assets SHILOW COMPANY Cash Budget April May June Quarter Cash balance, beginning Add: Collections from sales Total assets Liabilities and Shareholders' Equity Total cash avalable Deduct: Disbursements: Current liabilities: Purchases of inventory Operating expenses Purchase of equipment 2,700 2,700 Stockholders' equity: Total disbursements 2.700 2.700 Excess (deficiency) of cash Financing Total shareholders' equity Total liabilities and shareholders' equity Total financing Required: Using the preceding data: 1. Prepare a schedule of expected cash collections SHILOW COMPANY 5. Prepare an income statement for the quarter ended June 30. Schedule of Expected Cash Collections April May June Quarter Cash sales $ 79.200 $ B6,400 s 97.200 s 262,800 57,600 64,800 $ 104.400 S 144.000 $ 162.000 SHILOW COMPANY Credit sales 25,200 147,600 Income Statement Total cash collections 410,400 For the Quarter Ended June 30 Deduct: Cost of goods sold: 2. Prepare a schedule of inventory purchases and a schedule of expected cash disbursements for purchases. Goods available for sale SHILOW COMPANY Schedule of inventory Purchases April May June Quarter s 99,000 s 108,000S 121,500 Actual cost of goods sold Add: Desired ending inventory Total needs Deduct: Beginning inventory 328,5 97.200 205,200 82.200 $ 106.200s 123.000 s 89,100 s 318.3 86,400 64,800 248,4 Deduct: Operating expenses: 185,400 186,300 576.9 79,200 97,200 258,6 Actual purchase SHILOW COMPANY Schedule of Expected Cash Disbursements for Purchases April May June Quarter March purchases S 63.200 S 63.200 65900 85.900 131,800 147.550 Aprit purchases May purchases June purchases 73,775 73,775 60,950 60,950 Total cash disbursements S 120.100 S 130,675 $ 134,725 $ 403,500 6. Prepare a balance sheet as of June 30. 3. Prepare a schedule of expected cash disbursements for operating expenses. SHILOW COMPANY SHILOW COMPANY Balance Sheet Schedule of Expected Cash Disbursements for Operating Expenses as of June 30 April May June Quarter Assets -s 16.84Os 17.280 S 19,440 7.000 S 52.560 21,000 6.480 Salaries and wages Current assets: Rent 7,000 7,000 Other expenses 7,020 8.640 9,720 Total cash disbursements 30.760 S 32,920 $ 32,920 S 36, 160 S 80,040 4. Prepare a cash budget by month and for the quarter in total. (Any "Repayments" and "Interestr should be indicated by a minus sign) Total current assets SHILOW COMPANY Cash Budget April May June Quarter Cash balance, beginning Add: Collections from sales Total assets Liabilities and Shareholders' Equity Total cash avalable Deduct: Disbursements: Current liabilities: Purchases of inventory Operating expenses Purchase of equipment 2,700 2,700 Stockholders' equity: Total disbursements 2.700 2.700 Excess (deficiency) of cash Financing Total shareholders' equity Total liabilities and shareholders' equity Total financing

Answer rating: 100% (QA)

Sales Budget April 132000 May 144000 June Quarter Total Sales 162000 438000 1 Schedule of expected C... View the full answer