The following data relate to the operations of Shilow Compan y, a wholesale dist
ID: 2540549 • Letter: T
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
Shilow Company Actual & Buddgeted Sales March $ 50,000.00 April $ 66,000.00 May $ 71,000.00 June $ 96,000.00 July $ 47,000.00 Sales Budget Months April May June Quarter Budgeted sales $ 66,000.00 $ 71,000.00 $ 96,000.00 $ 233,000.00 Total sales $ 66,000.00 $ 71,000.00 $ 96,000.00 $ 233,000.00 Schedule of expected cash collections Sales April May June Quarter March sales=($50000*40%)in April $ 50,000.00 $ 20,000.00 $ 20,000.00 April sales=($66000*60%) in april and ($66000*40%) in May $ 66,000.00 $ 39,600.00 $ 26,400.00 $ 66,000.00 May sales=($71000 *60%) in May and ($71000*40%) in June $ 71,000.00 $ 42,600.00 $ 28,400.00 $ 71,000.00 June Sales=($96000*60%) in June $ 96,000.00 $ 57,600.00 $ 57,600.00 Total Cash collections $ 59,600.00 $ 69,000.00 $ 86,000.00 $ 214,600.00 Budgeted Cost of goods sold Cost of goods sold=(Sales*75%) April =($66000*75%) $ 49,500.00 May=($71000*75%) $ 53,250.00 June=($96000*75%) $ 72,000.00 July=($47000*75%) $ 35,250.00 April May June Quarter Budgeted Cost of Goods Sold $ 49,500.00 $ 53,250.00 $ 72,000.00 $ 174,750.00 Add:Ending Inventory=(80% of $53250) in April,(80% of $72000) in May,(80% of $35250) in June $ 42,600.00 $ 57,600.00 $ 28,200.00 $ 28,200.00 Total Needs $ 92,100.00 $ 110,850.00 $ 100,200.00 $ 202,950.00 Less: Opening Inventory=($49500*80%) $ 39,600.00 $ 42,600.00 $ 57,600.00 $ 39,600.00 Purchases cost $ 52,500.00 $ 68,250.00 $ 42,600.00 $ 163,350.00 Budgeted Cash disbursement of Mercendise Purchase Months April May June Quarter Accounts Payable $ 23,550.00 $ 23,550.00 April Purchases=($52500*50%) in April and ($52500*50%) in May $ 26,250.00 $ 26,250.00 $ 52,500.00 May Purchases=($68250*50%) in May and ($68250*50%) in June $ 34,125.00 $ 34,125.00 $ 68,250.00 June Purchases=($42600*50%) in June $ 21,300.00 $ 21,300.00 Total Cash Payments $ 49,800.00 $ 60,375.00 $ 55,425.00 $ 165,600.00 Schedule of Expected Cash Disbursement-Selling & Administerative Expenses Months April May June Quarter commission=($66000*12%) in April,($71000*12%) in May and ($96000*12%) in June $ 7,920.00 $ 8,520.00 $ 11,520.00 $ 27,960.00 Rent $ 2,300.00 $ 2,300.00 $ 2,300.00 $ 6,900.00 Other Expense=($66000*6%) in April,($71000*6%)in May,($96000*6%) in June $ 3,960.00 $ 4,260.00 $ 5,760.00 $ 13,980.00 Total Cash Payments $ 14,180.00 $ 15,080.00 $ 19,580.00 $ 48,840.00 Shilow Company For the three months ending June 30th Months April May June Quarter Cash Balance $ 7,500.00 $ 4,620.00 $ 4,165.00 $ 7,500.00 Add: Collections from customer $ 59,600.00 $ 69,000.00 $ 86,000.00 $ 214,600.00 Total Cash available $ 67,100.00 $ 73,620.00 $ 90,165.00 $ 222,100.00 Less: Disbursement Mercendise Purchase $ 49,800.00 $ 60,375.00 $ 55,425.00 $ 165,600.00 Commissions $ 7,920.00 $ 8,520.00 $ 11,520.00 $ 27,960.00 Rent $ 2,300.00 $ 2,300.00 $ 2,300.00 $ 6,900.00 Other Expenses $ 3,960.00 $ 4,260.00 $ 5,760.00 $ 13,980.00 Equipment Purchase $ 1,500.00 $ 1,500.00 Total Disbursemnts $ 65,480.00 $ 75,455.00 $ 75,005.00 $ 215,940.00 Excess/Deficiency of receipts over $ 1,620.00 $ (1,835.00) $ 15,160.00 $ 6,160.00 disbursements Financing: Borrowings $ 3,000.00 $ 6,000.00 $ 9,000.00 Repayments $ (9,000.00) $ (9,000.00) Interest=($3000*1%*3 months)+($6000*1%*2 month) $ (210.00) $ (210.00) Total Financing $ 3,000.00 $ 6,000.00 $ (9,210.00) $ (210.00) Cash Balance ,ending $ 4,620.00 $ 4,165.00 $ 5,950.00 $ 5,950.00 Shilow company Budgeted Income Statement For the three months ended June 30th Sales $ 233,000.00 Cost of goods sold= Beginning Inventory $ 39,600.00 Add: Purchases $ 163,350.00 Less: Ending Inventory $ 28,200.00 $ 174,750.00 Gross Margin $ 58,250.00 Selling & administerative Expenses Commission $ 27,960.00 Rent $ 6,900.00 Other Expenses $ 13,980.00 Depreciation=($765*3) $ 2,862.00 $ 51,702.00 Net Operating Income $ 6,548.00 Interest Expense $ (210.00) Net Income $ 6,338.00 Shilow company Budgeted Balance Sheet June 30th Assets Cash $ 5,950.00 Accounts Receivable=($96000*40%) $ 38,400.00 Inventory $ 28,200.00 Building & Equipment ,net=($127200+$1500-$2862) $ 125,838.00 Total Assets $ 198,388.00 Liabilities and stockholder's equity Accounts Payable=(June Purchase*50%)=($42600*50%) $ 21,300.00 Capital Stock $ 150,000.00 Retained Earning=($20750+$6338) $ 27,088.00 Total Liabilities and stockholder's equity $ 198,388.00
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