te The following data relate to the operations of Shilow Company a wholesale dis
ID: 2566773 • Letter: T
Question
te The following data relate to the operations of Shilow Company a wholesale distributor of consumer goods Cument assets as of March 31 7600 s 20.400 40 200 $128 400 23.925 150 000 5 22.675 Inventory Building and equipment e Capital stock a The gross margn is 2S% of sales b Actual and budgeted sales data March (actua May July S $1,000 s 72.000 s 97.000 s 48,000 Sales aro 60% for cash and 40% on credit Credt sales are collected rthe morth folowing salen e aceeunt.eceivable at March 31 .muter Ma ch eredtum d Each month's endng nventory should equal 80% of the folowing month's budgeted cost of goods sold e One-haf 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 3t ars the u of March purchases of f Monthly expenses are as folows commissons, 12% of sales, rent $2 400 per month, other sponses ienuong deprecateni 8% ef sales Anno nu fine operaes ano pad mothly anet) Depreciator, s S 963 per month onclues depreciation en g Equipment costing $1,600 will be purchased for cash in Apri h Management would ike to maintain a minimum cash balance of at least 54,000 at the end of each month The company has an agreement wth a ocal ban thal alows ine conery to increments of$1,000 t the begin ing of each month upto·total loan bea ce osoooor--wwraa an me" lean. seroo rdt eeley.ee een,et reet. compounded The company would as far as it is able, repay the loan plus accumulated interest at the and of the quar ALIENWAREExplanation / Answer
Required Budgets for Shilow Company are as prepared below:
Shillow Company Schedule of expected Cash collections For the quarter ended June 30 Month Particulars April May June Total Sales 67,000 72,000 97,000 236,000 Beginning Accounts Receivable March Credit sales (51,000*.4) 20,400 20,400 April Cash Sales 40,200 40,200 April Credit Sales 26,800 26,800 May Cash sales 43,200 43,200 May Credit Sales 28,800 28,800 June Cash sales 58,200 58,200 June Credit Sales 0 Total collections 60,600 70,000 87,000 217,600 Account receivable for June sale 38,800 Shillow Company Merchandise Purchase Budget For the quarter ended June 30 Month Particulars April May June Total Cost of goods sold (75% of sales) 50,250 54,000 72,750 177,000 Add: Desired Ending merchandise inventory (80% of next month COGS) 43,200 58,200 28,800 28,800 Total needs 93,450 112,200 101,550 205,800 Less: beginning merchandise inventory 40,200 43,200 58,200 40,200 Required purchase 53,250 69,000 43,350 165,600 Shillow Company Schedule of expected Cash payments For the quarter ended June 30 Month Particulars April May June Total Beginning Accounts Payable (a) $23,925 $23,925 April Purchases (b) $26,625 $26,625 $53,250 May Purchases (c ) $34,500 $34,500 $69,000 June Purchases (d) $21,675 $21,675 Total payments (a+b+c+d) $50,550 $61,125 $56,175 $167,850 Shillow Company Cash Budget For the quarter ended June 30 Month Particulars April May June Total Beginning Cash balance 7,600 4,590 4,105 7,600 Add: Collection from customers $60,600 $70,000 $87,000 217,600 cash available for use $68,200 $74,590 $91,105 $225,200 Less: cash Disbursements Merchandise purchase $50,550 $61,125 $56,175 167,850 Commissions (12% of sales) 8,040 8,640 11,640 28,320 Rent 2,400 2,400 2,400 7,200 Other exp (6% of sales) 4,020 4,320 5,820 14,160 Equipment purchase 1,600 0 0 1,600 Total disbusrement 66,610 76,485 76,035 219,130 Cash surplus/Deficit 1,590 -1,895 15,070 6,070 Financing Borrowing 3,000 6,000 9,000 Repayment -9,000 -9,000 Interest -120 -120 Net cash from Financing 3,000 6,000 9,120 -120 Budgeted ending cash balance 4,590 4,105 5,950 5,950 Shillow Company Budgeted Income Statement For the quarter ended June 30 Particulars Amount ($) Amount ($) Sales 236,000 Less: Cost of goods sold (75% of sales) 177,000 Gross margin 59,000 Less: Selling and administartive exp Depreciation (963*3) 2,889 Commissions (12% of sales) 28,320 Rent 7,200 Other exp (6% of sales) 14,160 52,569 Net operating Income 6,431 Interest expense 120 Net Income 6,311 Shillow Company Budgeted balance Sheet Jun-30 Assets Cash 5,950 Accounts Receivable 38,800 Inventory 28,800 Building and equipment Net 127,111 Total assets 200,661 Liabilities and Stockholders' Equity Accounts Payable purchases 21,675 Common Stock 150,000 Retained earnings (22,675+6,311) 28,986 Total liabilities and stockholders' equity 200,661 0 Interest 3,000*2% 60 6,000*1% 60 120Related Questions
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