The following data relate to the operations of Shilow Compan y, a wholesale dist

Question

The following data relate to the operations of Shilow Compan y, a wholesale distributor of consumer goods current assets as of March 31 Cash Accounts receivable $ 7,500 20,000 39,600 127,200 s 23,550 150,000 20,750 Buiiding and equipment, net Accounts payable n toek Retained earninge a. The gross margin is 25% of sales. b. Actual and budgeted sales date: Hareh (actual April May June July 50,000 s 66,000 71,000 96,000 47,000 March c. Sales are 60% for cash and 40%on credit. Credit sales are collected in the month following sale. The accounts receivable at 31 are a result of March credit sales d. 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 c. Sales are 60% for cash and 40% on cred, Cr.

Explanation / Answer

Shallow Company Cash Budget April May June Quarter Beginning Cash Balance           7,500           4,620              5,165           7,500 Add: Collection from Customers        59,600        69,000            86,000     2,14,600 Total Cash available        67,100        73,620            91,165     2,22,100 Less: Cash disbursements: For Inventory        49,800        60,375            84,225     1,94,400 For Expenses        14,180        15,080            19,580        48,840 For Equipement           1,500                  -                       -             1,500 Total Cash disbursement        65,480        75,455        1,03,805     2,44,740 Excess (defeciency ) of cash available over disbursement           1,620         -1,835          -12,640       -22,640 Financing: Borrowing           3,000           7,000            10,000        20,000 Repayment        20,200 Ineterest                 30                 70                  100              200 Total financing           3,030           7,070            10,100        20,200 End Cash Balance           4,620           5,165             -2,640         -2,640 Collection from Customers May June April 26400 May 42600 May 28400 June 57600 69000 86000 Invenory April May June Opening April (66000x75%x80%) 36000 May (71000x75%x80%) 42600 June( 96000x75%/80%) 57600 Add: Purchase 52500 68250 100200 88500 110850 100200 Less: Sold 45900 53250 72000 Closing 42600 57600 28200 Expenses April May June Commission 8520 11520 Rent 2300 2300 Other Expense 4260 5760 Total 15080 19580

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