Please help on the following questions:) Thank you in advanced!
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:
Current assets as of March 31: Cash $ 8,800 Accounts receivable $ 25,200 Inventory $ 47,400 Building and equipment, net $ 114,000 Accounts payable $ 28,425 Capital stock $ 150,000 Retained earnings $ 16,975
a. The gross margin is 25% of sales. b. Actual and budgeted sales data:
March (actual) $63,000 April $79,000 May $84,000 June $109,000 July $60,000
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 monthâs ending inventory should equal 80% of the following monthâs budgeted cost of goods sold. e. One-half of a monthâs 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, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets).
g. Equipment costing $2,800 will be purchased for cash in April. h. Management would like to maintain a minimum cash balance of at least $4,000 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 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 data above: 1. Complete the following schedule.
Schedule of Expected Cash Collections April May June Quarter Cash sales $47,400 Credit sales 25,200 Total collections $72,600
2.) Complete the following:
Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold $59,250 Add desired ending inventory 50,400 Total needs 109,650 Less beginning inventory 47,400 Required purchases $62,250
Budgeted cost of goods sold for April = $79,000 sales à 75% = $59,250.
Add desired ending inventory for April = $63,000 Ã 80% = $50,400.
Schedule of Expected Cash DisbursementsâMerchandise Purchases April May June Quarter March purchases $28,425 $28,425 April purchases 31,125 31,125 62,250 May purchases June purchases Total disbursements
3.)
Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.)
Shilow Company Cash Budget April May June Quarter Beginning cash balance $8,800 Add cash collections 72,600 Total cash available 81,400 Less cash disbursements: For inventory 59,550 For expenses 17,820 For equipment 2,800 Total cash disbursements 80,170 Excess (deficiency) of cash 1,230 Financing: Borrowings Repayments Interest Total financing Ending cash balance
4.)
Prepare an absorption costing income statement for the quarter ended June 30.\
Shilow Company Income Statement For the Quarter Ended June 30 Cost of goods sold: Selling and administrative expenses:
5.)
Prepare a balance sheet as of June 30.
Shilow Company Balance Sheet June 30 Assets Current assets: Total current assets Total assets Liabilities and Stockholdersâ Equity Stockholders' equity: Total liabilities and stockholdersâ equity
Please help on the following questions:) Thank you in advanced!
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: |
Current assets as of March 31: | ||
Cash | $ | 8,800 |
Accounts receivable | $ | 25,200 |
Inventory | $ | 47,400 |
Building and equipment, net | $ | 114,000 |
Accounts payable | $ | 28,425 |
Capital stock | $ | 150,000 |
Retained earnings | $ | 16,975 |
a. | The gross margin is 25% of sales. |
b. | Actual and budgeted sales data: |
March (actual) | $63,000 |
April | $79,000 |
May | $84,000 |
June | $109,000 |
July | $60,000 |
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 monthâs ending inventory should equal 80% of the following monthâs budgeted cost of goods sold. |
e. | One-half of a monthâs 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, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets). |
g. | Equipment costing $2,800 will be purchased for cash in April. |
h. | Management would like to maintain a minimum cash balance of at least $4,000 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 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 data above: | |||||||||||||||||||||||||||||
1. | Complete the following schedule.
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2.) Complete the following:
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Budgeted cost of goods sold for April = $79,000 sales à 75% = $59,250. | |||||||||||||||||||||||||||||||||||
Add desired ending inventory for April = $63,000 Ã 80% = $50,400.
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3.)
Complete the following cash budget: (Borrow and repay in increments of $1,000. Cash deficiency, repayments and interest should be indicated by a minus sign.)
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4.)
Prepare an absorption costing income statement for the quarter ended June 30.\
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5.)
Prepare a balance sheet as of June 30.
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