The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods, as

Question:

The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods, as of March 31:

Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000

Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 20,000

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000

Building and equipment, net . . . . . . . . . . . . . .120,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . 21,750

Common shares . . . . . . . . . . . . . . . . . . . . . . . 150,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . 12,250

The gross margin is 25% of sales.

b. Actual and budgeted sales data are as follows:

March (actual) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000

April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000

May. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000

June. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000

July. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000

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. 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 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 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets).

g. Equipment costing $1,500 will be purchased for cash in April.

h. The company must maintain a minimum cash balance of $4,000. 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. The monthly interest rate is 1%. Interest must be paid at the end of each month based on the total loans outstanding for that month.

Required:

Using the data above, complete the following:

1. Schedule of expected cash collections:

April June May Quarter Cash sales. Credit sales*. Total collections.. ...... $36,000 $56,000 *40% of prior month's sales

2. Merchandise purchases budget:

The following data relate to the operations of Soper Company,

Schedule of expected cash disbursements€”Merchandise purchases:

3. Schedule of expected cash disbursements€”Selling and administrative expenses:

4. Cash budget:

5. Prepare an absorption costing income statement, similar to the one shown in Schedule 9, for the quarter ended June 30.
6. Prepare a balance sheet as of June 30.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...