The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:...
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The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash......... Accounts receivable... Merchandise inventory.. Building and equipment, net.. Accounts payable....... Common stock... Retained earnings..... $ 8,000 $ 29,500 $ 36,000 $120,000 $ 25,750 $150,000 $ 17,750 The gross margin is 25% of sales. Thus, the cost of merchandise and the cost of goods sold is 75% of selling price. Actual and budgeted sales data: February (actual).... March (actual).. April......... May.. June... July... $45,000 .$50,000 $60,000 $72,000 $90,000 ..$48,000 Fifty percent of sales are collected in the month of sale and 40 percent in the following month, and 10 percent in the second month following the month of sale. The accounts receivable on March 31 are the results of February credit sales (i.e., 10% of February has not been collected) and March credit sales (i.e., 50% of March has not been collected). Each month's ending inventory should equal 60% of the following month's budgeted cost of goods sold. Thirty percent of a month's inventory purchases is paid for in the month of purchase; the other 70 percent is paid for in the following month. The accounts payable balance at March 31 is the result of March purchases of inventory. Required: 1. (7.5 points) Prepare the cash collection budget for the second quarter (i.e., April, May, and June). 2. (2 points) What is the accounts receivable balance at the end of June? 3. (8 points) Prepare the merchandise purchases budget (in dollars) for the second quarter (April, May, and June). Use the following format: Cost of Goods Sold Plus: Expected Ending Inventory Minus: Expected Beginning Inventory = Merchandise Purchases 4. (6 points) Prepare the cash disbursement budget for merchandise purchases for the second quarter (April, May, and June). 5. (1.5 points) What is the accounts payable balance for merchandise purchases at the end of June? The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash......... Accounts receivable... Merchandise inventory.. Building and equipment, net.. Accounts payable....... Common stock... Retained earnings..... $ 8,000 $ 29,500 $ 36,000 $120,000 $ 25,750 $150,000 $ 17,750 The gross margin is 25% of sales. Thus, the cost of merchandise and the cost of goods sold is 75% of selling price. Actual and budgeted sales data: February (actual).... March (actual).. April......... May.. June... July... $45,000 .$50,000 $60,000 $72,000 $90,000 ..$48,000 Fifty percent of sales are collected in the month of sale and 40 percent in the following month, and 10 percent in the second month following the month of sale. The accounts receivable on March 31 are the results of February credit sales (i.e., 10% of February has not been collected) and March credit sales (i.e., 50% of March has not been collected). Each month's ending inventory should equal 60% of the following month's budgeted cost of goods sold. Thirty percent of a month's inventory purchases is paid for in the month of purchase; the other 70 percent is paid for in the following month. The accounts payable balance at March 31 is the result of March purchases of inventory. Required: 1. (7.5 points) Prepare the cash collection budget for the second quarter (i.e., April, May, and June). 2. (2 points) What is the accounts receivable balance at the end of June? 3. (8 points) Prepare the merchandise purchases budget (in dollars) for the second quarter (April, May, and June). Use the following format: Cost of Goods Sold Plus: Expected Ending Inventory Minus: Expected Beginning Inventory = Merchandise Purchases 4. (6 points) Prepare the cash disbursement budget for merchandise purchases for the second quarter (April, May, and June). 5. (1.5 points) What is the accounts payable balance for merchandise purchases at the end of June?
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