PROBLEM $7-8$ Preparing a Comprehensive Master Budget $[$LO$2-$ CC$5,7,11,12$; LO$3-$ CC$13,14]$ Following is selected information relating to the operations of Shilow Company, a wholesale distributor: CHECK FIGURES $(2)$ May purchases: $\backslash (\backslash$$ $64,800\backslash )(4)$ May $31$ cash balance: $\backslash (\backslash$$ $4,590\backslash )$ a$.$ Gross margin is $\backslash (25\backslash \%\backslash )$ of sales. b$.$ Actual and budgeted sales data are as follows: c$.$ Sales are $\backslash (60\backslash \%\backslash )$ for cash and $\backslash (40\backslash \%\backslash )$ 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 $\backslash (80\backslash \%\backslash )$ 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, $\backslash (12\backslash \%\backslash )$ of sales; rent, $\backslash (\backslash$$ $2,500\backslash )$ per month; other expenses $($excluding depreciation$),\backslash (6\backslash \%\backslash )$ of sales. Assume that these expenses are paid monthly. Depreciation is $\backslash (\backslash$$ $900\backslash )$ per month $($includes depreciation on new assets$).$ g$.$ Equipment costing $\backslash (\backslash$$ $1,500\backslash )$ will be purchased for cash in April. h$.$ The company must maintain a minimum cash balance of $\backslash (\backslash$$ $4,000\backslash ).$ 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 $\backslash (\backslash$$ $1,000\backslash ).$ The annual interest rate is $\backslash (12\backslash \%\backslash ).$ Interest is paid only at the time of repayment of principal; figure interest on whole months $\backslash ((1/12,2/12\backslash ),$ and so forth$).$