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:

  

  

  

Required:

Using the data above:

1. Complete the following schedule.

Current assets as of March 31: Cash $ 8,600 Accounts receivable $ 24,400 Inventory $ 46,200 Building and equipment, net $ 118,800 Accounts payable $ 27,675 Capital stock $ 150,000 Retained earnings $ 20,325

Schedule of Expected Cash Collections April May June Quarter Cash sales Credit sales Total collections $ 46,200 24,400 $ 70,600 2. Complete the following Merchandise Purchases Budget April May June Quarter Budgeted cost of goods sold$ 57,750 Add desired ending inventory Total needs Less beginning inventory Required purchases 49,200 106,950 46,200 $ 60,750 Schedule of Expected Cash Disbursements-Merchandise Purchases April May June Quarter March purchases April purchases May purchases June purchases Total disbursements $ 27,675 30,375 $ 27,675 30,375 60,750

Explanation / Answer

Sales Budget April May June Total Sales                77,000                82,000              107,000              266,000 Cash Sales - 60%                46,200                49,200                 64,200              159,600 Credit Sales - 40%                30,800                32,800                 42,800              106,400 Answer 1. Schedule of Expected Cash Collections April May June Total Cash Sales                46,200                49,200                 64,200              159,600 Credit Sales                24,400                30,800                 32,800                88,000 Total cash Collections                70,600                80,000                 97,000              247,600 Answer 2. Merchandise Purchase Budget April May June Total Budgeted Cost of Goods Sold - 75% of Sales                57,750                61,500                 80,250              199,500 Add: Ending Inventory                49,200                64,200                 34,800                34,800 Total Needs              106,950              125,700              115,050              234,300 Less: Beginning Inventory              (46,200)              (49,200)              (64,200)              (46,200) Required Purchases                60,750                76,500                 50,850              188,100 Schedule of Expected Cash Disbursements - Merchandise Purchases April May June Total Cash Payment March Purchases                27,675                27,675 April Purchases                30,375                30,375                60,750 May Purchases                38,250                 38,250                76,500 June Purchases                 25,425                25,425 Total Cash Payment to Suppliers                58,050                68,625                 63,675              190,350 Selling & Admn. Budget April May June Total Sales Comm. - 12% of Sales                  9,240                   9,840                 12,840                31,920 Rent (Fixed)                  3,400                   3,400                   3,400                10,200 Other Expense - 6% of Sales                  4,620                   4,920                   6,420                15,960 Depreciation                      891                      891                       891                   2,673 Total                18,151                19,051                 23,551                60,753 Schedule of Cash payments of Selling & Admn. Budget April May June Total Sales Comm. - 12% of Sales                  9,240                   9,840                 12,840                31,920 Rent (Fixed)                  3,400                   3,400                   3,400                10,200 Other Expense - 6% of Sales                  4,620                   4,920                   6,420                15,960 Total                17,260                18,160                 22,660                58,080 Answer 3. Cash budget April May June Total Beginning cash Balance                  8,600                   4,290                   4,505                   8,600 Add: Cash Collection                70,600                80,000                 97,000              247,600 Total Cash available                79,200                84,290              101,505              256,200 Less: Cash Disbursements For Inventory                58,050                68,625                 63,675              190,350 For Expenses                17,260                18,160                 22,660                58,080 For Equipment                  2,600                          -                            -                     2,600 Total Cash Disbursement                77,910                86,785                 86,335              251,030 Cash Balance Closing                  1,290                (2,495)                 15,170                   5,170 Add: Finance from Bank                  3,000                   7,000                10,000 Less: Payment to Bank                         -                            -                (10,000)              (10,000) Less: Payment of interet - Bank loan                         -                            -                      (230)                    (230) Net Cash Balance Closing                  4,290                   4,505                   4,940                   4,940 Income Statement For the Qtr Ending June 30 Sales              266,000 Cost of Goods Sold - 75% of sales              199,500 Gross Margin                66,500 Less: Selling & Administration Expense Sales Comm. - 12% of Sales                31,920 Rent (Fixed)                10,200 Other Expense - 6% of Sales                15,960 Depreciation                  2,673                60,753 Operating Profit                   5,747 Less: Interest Expenses                      230 Net Income                   5,517 Balance Sheet As on June 30 Assets Current Assets Cash                  4,940 Accounts receivables                42,800 Inventory                34,800                82,540 Fixed Assets Building & Equipment ($118,800 + $2,600)              121,400 Less: Dep.                (2,673)              118,727 Total Assets              201,267 Liabilities Accounts Payable                25,425 Total liabilities                25,425 Shareholders's Equity Common Stock              150,000 Retained Earnings                25,842 Total Stockholders equity              175,842 Total liabilities & Stockholders' Equity              201,267                          -   Schedule of Retained Earnings As on June 30 Opening Balance                20,325 Add: net income                   5,517 Less: Dividend declared                          -   Closing Balance                25,842

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