The following data relate to the operations of Shilow Comp wholesale distributor

Question

The following data relate to the operations of Shilow Comp wholesale distributor of consumer goods any, a Current assets as of March 31 $ 7.700 20,800 S 40,800 $ 129,600 24,300 150,000 $ 24,600 Accounts receivable Inventory Building and equipment, net Accounts payable Capital stock Retained earnings a The gross margin is 25% of sales b. Actual and budgeted sales data March (actual) Apri May June July $52,000 68,000 73,000 $98,000 $49,000 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 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 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 $972 per month (includes depreciation on new assets). g. Equipment costing $1,700 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

Explanation / Answer

Solution.

A.

B.

C.

D.

Shllow Company Shedule of expected cash Collections Particular April May June Quarter Cash sales            40,800            43,800            58,800                 143,400 Credit sales            20,800            27,200            29,200                   77,200 Total Collection            61,600            71,000            88,000                 220,600

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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