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Error-Blackboard Learn MMy UND I UND: Universi x-p Mail x- Mail xConnect Appssyllabus fine arts Ch. 8: Homework Saved Help Save & Exit Submit 5 Check my work 5 Problem 8-29 Completing a Master Budget LO8-2, L08-4, LO8-7, LO8-8, LO8-9, LO8-10] The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: points Current assets as of March 31: 02.04:25 $9,400 27,600 $ 51,0oe $ 99,600 $ 38,675 $ 150,000 $ 6,925 Cash Accounts receivable Inventory Building and equipment, net Accounts payable Cormon stock eBook Print Retained earnings a. The gross margin is 25% of sales b. Actual and budgeted sales data March (actual) April May unc July $ 69,800 5 85,800 5 90,800 5 115,000 $ 66,800 Mc Graw

Explanation / Answer

1) Shilow company Schedule of Expected cash collections April May June Quarter Cash sales 51000 54000 69000 174000 credit sales 27,600 34000 36000 97,600 total collections 78600 88000 105000 271600 Accounts receivable = 115000*40%= 46000 2) Merchandise purchase budget April May June Quarter Budgeted cost of goods sold 63750 67500 86250 217500 49500 Add Desired ending inventory 54000 69000 39600 39,600 total needs 117750 136500 125850 257100 less beginning inventory 51,000 54,000 69,000 51,000 Required purchases 66,750 82,500 56,850 206,100 cost of goods sold = 75% of sales ending inventory = 80% of following months budgeted cost of goods sold 3) Schedule of Cash disbursements-Merchandise purhcase April May June Quarter March purchases 30,675 30,675 April purchases 33375 33,375 66750 May purchases 41250 41,250 82500 June purchases 28425 28425 total disbursements 64,050 74625 69675 208,350 Accounts payable june 30 = 28,425 4) Cash budget April May June Quarter Beginning cash balance 9,400 4,050 4,025 9,400 Add Cash collectiosn 78600 88000 105000 271600 total cas h available 88,000 92,050 109,025 281,000 less cash disbursements for inventory 64,050 74625 69675 208,350 for expenses 19500 20400 24900 64800 for equipment 3,400 0 0 3,400 total cash disbursements 86,950 95025 94575 276,550 Excess(Deficiency)of cash 1,050 -2,975 14,450 4,450 Financing: Borrowings 3,000 7,000 0 10,000 Repayments 0 -10,000 -10,000 interest 0 -230 -230 total financing 3,000 7,000 -10230 -230 Ending cash balance 4,050 4,025 4,220 4,220 interest = 3000*1%*3= 90 7000*1%*2= 140 230 5) income statement Sales 290000 cost of goods sold Beginning inventor 51,000 Add purchases 206,100 goods available for sale 257,100 ending inventory 39,600 217,500 Gross margin 72,500 Selling and administrative expense commissions 34800 rent 12600 Depreciation (747*3) 2241 other expenses 17400 67041 net operating 5,459 interest expense 230 net income 5,229 Balance sheet Assets current assets Cash 4,220 Accounts receivable 46,000 inventory 39,600 total current assets 89,820 Building And equipment ,net (99600+3400-2241) 100759 total Assets 190,579 liabilities And stockholder 's Equity Accounts payable 28,425 total current assets 28,425 Stockholder's Equity Capital stock 150,000 Retained earnings(6,925+5229) 12154 162,154 total liabilites & stockholders Equity 190,579

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