The following data relate to the operations of Shilow Company, a wholesale distr

Question

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: The gross margin is 25% of sales. Actual and budgeted sales data: 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. Each month' s ending inventory should equal 80% of the following month' s budgeted cost sold. One-half of a month's inventory purchases is paid for in the month of purchase; the o is paid for in the following month. The accounts payable at March 31 are the result o purchases of inventory. Monthly expenses are as follows: commissions, 12% of sales, rent, $2,500 per month; o expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid m Depreciation is $900 per month (includes depreciation on new assets). Equipment costing $1, 500 will be purchased for cash in April. Management would like to maintain a minimum cash balance of at least $4,000 at the en month. The company has an agreement with a local bank that allows the company to borr increments of $1,000 at the beginning of each month, up to a total loan balance of $2 interest rate on these loans is 1% per month and for simplicity we will assume that i not compounded. The company would, as far as it is able, repay the loan plus accumulate interest at the end of the quarter. Using the preceding data: Complete the following schedule: Complete the following: Complete the following: Complete the following cash budget: Prepare an absorption costing income statement, similar to the one shown in Schedule chapter, for the quarter ended June 30. Prepare a balance sheet as of June 30.

Explanation / Answer

Cash 60% Credit 40% April May June Quarter Sales per month $   60,000.00 $              72,000.00 $   90,000.00 $   48,000.00 0 $                  -   Cash $   36,000.00 $              43,200.00 $   54,000.00 $ 133,200.00 Credit $   20,000.00 $              24,000.00 $   28,800.00 $    72,800.00 Total cash collections $   56,000.00 $              67,200.00 $   82,800.00 $ 206,000.00

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.