Question

The following data relate to theoperations of Picanuy Corporation, a wholesale distributor ofconsumer goods:

Current assets as ofDecember 31:
Cash	$	6,000
Accounts receivable	$	39,360
Inventory	$	10,710
Buildings andequipment, net	$	112,700
Accountspayable	$	32,280
Capital stock	$	100,000
Retainedearnings	$	36,490

a.	The gross margin is 30% ofsales. (In other words, cost of goods sold is 70% of sales.)
b.	Actual and budgeted sales dataare as follows:

December(actual)	$65,600
January	$76,500
February	$88,700
March	$92,200
April	$60,500

c.	Sales are 40% for cash and 60% on credit. Credit sales arecollected in the month following sale. The accounts receivable atDecember 31 are the result of December credit sales.
d.	Each month’s ending inventoryshould equal 20% of the following month's budgeted cost of goodssold.
e.	One-quarter of a month’s inventory purchases is paid for in themonth of purchase; the other three-quarters is paid for in thefollowing month. The accounts payable at December 31 are the resultof December purchases of inventory.
f.	Monthly expenses are as follows: commissions, $16,510; rent,$2,000; other expenses (excluding depreciation), 8% of sales.Assume that these expenses are paid monthly. Depreciation is $500for the quarter and includes depreciation on new assets acquiredduring the quarter.
g.	Equipment will be acquired forcash: $3,790 in January and $8,990 in February.
h.	Management would like to maintain a minimum cash balance of$5,000 at the end of each month. The company has an agreement witha local bank that allows the company to borrow and repay inincrements of $1,000 at the beginning of each month, up to a totalloan balance of $50,000. The interest rate on these loans is 1% permonth, and for simplicity, we will assume that interest is notcompounded. The company would, as far as it is able, repay the loanplus accumulated interest at the end of the quarter.

Required:
Using the dataabove:
1.	Complete the following schedule:(Omit the "$" sign in your response.)

Schedule of Expected Cash Collections
	January	February	March	Quarter
Cash sales	$30,600	$	$	$
Credit sales	39,360
Totalcollections	$69,960	$	$	$

2.	Complete the following: (Input all amounts as positivevalues. Leave no cells blank - be certain to enter "0" whereverrequired. Round the "Schedule of Expected Cash Disbursements —Merchandise Purchases" answers to 2 decimal places. Omit the "$"sign in your response.)

Merchandise Purchases Budget
	January		February	March	Quarter
Budgeted cost ofgoods sold	$53,550	*	$	$	$
Add desired endinginventory	12,418	â€
Total needs	65,968
Less beginninginventory	10,710
Requiredpurchases	$55,258		$	$	$

*$76,500 sales × 70% =$53,550.

†$88,700 × 70% × 20% =$12,418.

Schedule of Expected Cash Disbursements—MerchandisePurchases
		January		February		March		Quarter
Decemberpurchases		$32,280.00	*	$		$		$32,280.00
Januarypurchases		13,814.50		41,443.50				55,258.00
Februarypurchases
March purchases
Totaldisbursements		$46,094.50		$		$		$

*Beginning balance of theaccounts payable.

3.	Complete the following schedule:(Omit the "$" sign in your response.)

Schedule of Expected Cash Disbursements—Selling andAdministrative Expenses
	January	February	March	Quarter
Commissions	$16,510	$	$	$
Rent	2,000
Other expenses	6,120
Totaldisbursements	$24,630	$	$	$

4.

Complete the following cash budget: (Borrow and repay inincrements of $1,000. Input all amounts as positive values exceptcash deficiency, repayments and interest which should be indicatedby a minus sign. Round your answers to 2 decimal places. Leave nocells blank - be certain to enter "0" wherever required. Omit the"$" sign in your response.)

Picanuy Corporation
Cash Budget
	January	February	March	Quarter
Cash balance,beginning	$ 6,000.00	$	$	$
Add cashcollections	69,960.00
Total cashavailable	75,960.00
Less cashdisbursements:
Forinventory	46,094.50
Foroperating expenses	24,630.00
Forequipment	3,790.00
Total cashdisbursements	74,514.50
Excess (deficiency)of cash	1,445.50
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance,ending	$	$	$	$

5.	Prepare an absorption costing income statement for the quarterended March 31. (Input all amounts as positive values. Omitthe "$" sign in your response.)

Picanuy Corporation Income Statement For the Quarter Ended March 31
(Click toselect)Ending inventoryNet operating income (loss)BeginninginventoryNet income (loss)SalesOther expensesGross marginGoodsavailable for sale		$
Cost of goodssold:
(Click toselect)Beginning inventoryNet operating income(loss)DepreciationEnding inventoryPurchasesGoods available forsaleOther expensesGross margin	$
(Click to select)OtherexpensesEnding inventoryGross marginNet operating income(loss)DepreciationPurchasesSalesInterest expenses
(Click to select)GrossmarginNet operating income (loss)PurchasesDepreciationSalesOtherexpensesBeginning inventoryGoods available for sale
(Click to select)EndinginventoryBeginning inventoryDepreciationOther expensesGrossmarginInterest expensesPurchasesNet operating income (loss)
(Click to select)Netoperating income (loss)PurchasesSalesGoods available forsaleBeginning inventoryNet income (loss)Gross marginInterestexpense
Selling andadministrative expenses:
(Click toselect)Beginning inventoryRentNet operating income (loss)Goodsavailable for saleGross marginDepreciationCommissionsOtherexpenses
(Click toselect)RentBeginning inventoryDepreciationCommissionsOtherexpensesNet operating income (loss)Gross marginGoods available forsale
(Click to select)Goodsavailable for saleBeginning inventoryOther expensesNet operatingincome (loss)CommissionsDepreciationGross marginRent
(Click to select)Goodsavailable for saleBeginning inventoryCommissionsDepreciationOtherexpensesGross marginRentNet operating income (loss)
(Click toselect)SalesNet operating income (loss)CommissionsEndinginventoryGoods available for saleDepreciationPurchasesGrossmargin
(Click toselect)Beginning inventoryNet operating income (loss)GrossmarginInterest expenseSalesDepreciationEnding inventoryOtherexpenses
(Click toselect)SalesOther expensesGoods available for saleGrossmarginDepreciationEnding inventoryInterest expenseNet income(loss)		$

6.	Prepare a balance sheet as ofMarch 31. (Be sure to list the assets and liabilities inorder of their liquidity. Round your answers to 2 decimal places.Omit the "$" sign in your response.)

Picanuy Corporation Balance Sheet March 31
Assets
Current assets:
(Click toselect)CashInventoryAccounts payableFixed assets-netAccountsreceivable		$
(Click to select)AccountsreceivableAccounts payableCashInventoryFixed assets-net
(Click to select)Fixedassets-netAccounts payableCashInventoryAccounts receivable
Total currentassets
(Click toselect)InventoryCashAccounts receivableFixed assets-netAccountspayable
Total assets		$
Liabilities and Stockholders’ Equity
(Click toselect)Accounts receivableCapital stockRetained earningsBank loanpayableAccounts payable		$
(Click toselect)Accounts receivableCapital stockRetained earningsBank loanpayableAccounts payable
Stockholders'equity:
(Click to select)AccountsreceivableCashAccounts payableBank loan payableCapital stock	$
(Click toselect)CashAccounts payableRetained earningsAccounts receivableBankloan payable
Total liabilitiesand stockholders' equity		$