Problem $9-24$ Completing a Master Budget $[$LO$2]$

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

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 the result of March credit sales.

d$.$ Each month's ending inventory should equal $80\%$ of the 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 one$-$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$; other expenses $($excluding depreciation$),6\%$

of sales. Assume that these expenses are paid monthly. Depreciation is $$900$ per month and includes depreciation on new

assets.

g$.$ Equipment will be acquired for cash: $$1,500$ in April.

h$.$ Management would like to maintain a minimum cash balance of $$4,000$ at the end of each month. The company has an

agreement with a local bank that allows the company to borrow as needed 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 preceding data complete the following:

$1).$ Sales Budget and Schedule of Expected Cash Collection.

$2).$ Inventory Purchases Budget.

$3).$ Schedule of Expected Cash disbursements $$ Inventory Purchases.

$4).$ Cash Budget.

$5).$ Absorption Costing Income Statement for the Quarter Ending June $30.$

$6).$ Balance Sheet as at June $30.$