PROBLEM 8-29 Completing a Master Budget LO8-2, LOB-4, LOB-7, LOS-8, LOS-9, LOS-10 The following data relate to the operations of Shilow Company, a wholesale distributor sumer goods. Current assets as of March 31: Cash Accounts receivable Inventory... Building and equipment, net. Accounts payable Common stock... Retained earnings $8.000 $20.000 $36.000 $120,000 $21.750 $150.000 $12.250 a The gross margin is 25% of sales. Actual and budgeted sales data: March (actual April May June July $50,000 550.000 $72.000 $90.000 548.000 c. Sales are 60% for cash and 40% on credit. Credit sales we collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales Each month's ending inventory should equal 80% of the following month's badgeted cost of goods sold 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 me the result of March purchases of inventory 1. Monthly expenses are as follows: cottamissions, 12% of sales, sent, $2.500 per month other expenses (excluding depreciation), 65 of sales Assume that these expenses are paid monthly Depreciation is S900 per month (includes depreciation on new assets) Equipment casting S1 Soo will be purchased for cash in April Management would like to maintain a minimum cash balance of at least 54.000 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 15 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 quartet Required Using the preceding data 1. Complete the following schedule Schedule of Expected Cash Collections April May June Quarter Cash sales $36.000 Credit sales 20.000 Total collections $56.000 2 Complete the following Merchandise Purchases Budget May June Quarter Budgeted cost of goods sold Add desired ending inventory Total needs. Less beginning inventory Required purchases Ant $45,000 $54.000 43.200 88.200 36.000 $52200 For SO 200 x 75 $45.000 354000X8543.200 June Schedule of Expected Cash Disbursements-Merchandise Purchases April May March purchases $21.750 April purchases 26,100 $26,100 May purchases June purchases Total disbursements $47850 Quartet $21,750 52,200 3. Complete the following cash budget: Cash Budget Apni May June Quarter Beginning cash balance $8,000 Add cash collections 56.000 Total cash available 64.000 Loss cash disbursements For inventory 47,850 For expenses 13.300 For equipment 1,500 Total cash disbursements 62650 Excess (deficiency of cash 1,350 Financing Etc 4. Using Schedule 9 as your guide, prepare an absorption costing income statement for the quar ter ended June 30 5. Prepare a balance sheet as of June 30