Please provide step by step instructions: The following data relate to the opera

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Please provide step by step instructions:

The following data relate to the operations of Stikw Company, a wholesale distributor of consumer goods Current assets as of March 31. Accounts receivable Inventory Building and equipment net Accounts payable Cantal stock Retained earnings $ 9,300 3 27.200 50,400 $102 000 $ 30,300 $150,000 3 8.600 a The gross margin is 25% of sales b. Actual and budgeted sales data: Merch (actual) April June S 60,000 $ 54.CCO $ 89,000 $ 114,000 S 65.000 C. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. d Each month's ending inventory shoukl equal 80% of the following month's budgeted cast of goods saka e One-half of a months inventory purchases is paid for in the month of purchase, the other half is paid for in the collowing month. The accounts payatole at March 31 are the result of March purchases of inventory. t Monthly Cxpenses are as follows: Commissions, 12% of salics; rent, $4,100 per month; other expenses (excluding dicpreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $756 por month (includes depreciation on new assets). g Equipment Costing 33,300 will be purchased for cash In April Management would like to maintain a minimum cash balance of at least $4,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these aans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter Required: Using the data above: 1. Complete the following schedule. y June Schedule of Expected Coah Collections April May Casih sales 5 50,4001 Credit cales 27,200 i Total collectors 3 TT,500

Explanation / Answer

1 Schedule of expected cash collections April May June Quarter Cash sales 50400 53400 68400 172200 (84000*60%) (89000*60%) (114000*60%) Credit sales-Of the previous month 27200 33600 35600 96400 (84000*40%) (89000*40%) Total 77600 87000 104000 268600 2 Merchandise purchase April May June Quarter Budgeted cost of goods sold 63000 66750 85500 215250 (Note:1) (84000*75%) (89000*75%) (114000*75%) Add:Desired ending inventory (80% of following month's 53400 68400 39000 160800 Budgeted cost of goods sold) (66750*80%) (85500*80%) (65000*75%*80%) Total needs 116400 135150 124500 376050 Less:Beginning inventory 50400 53400 68400 172200 Required purchase 66000 81750 56100 203850 Schedule of expected cash disbursements-Merchandise purchase April May June Quarter March purchase 30300 30300 April purchase 33000 33000 66000 May purchase 40875 40875 81750 June purchase 28050 28050 Total disbursements 63300 73875 68925 206100 Notes: 1. Gross margin is 25% of sales.Hence,cost of goods sold is 75% of sales 3 Cash budget April May June Quarter Beginning cash balance 9300 4080 4085 Add:Cash collections 77600 87000 104000 268600 Total cash available 86900 91080 108085 Less:cash disbursement For inventory 63300 73875 68925 206100 For expenses Commission (12% of sales) 10080 10680 13680 34440 (84000*12%) (89000*12%) (114000*12%) Rent 4100 4100 4100 12300 Other expenses (6% of sales) 5040 5340 6840 17220 (84000*6%) (89000*6%) (114000*6%) For equipment 3300 Total cash disbursement 85820 93995 93545 273360 Excess (deficiency) of cash 1080 -2915 14540 Minimum cash balance 4000 4000 4000 Financing: Borrowings 3000 7000 Repayments 10000 Interest (3000*1%*2) 60 (7000*1%*1) 70 Total financing 3000 7000 10130 Ending cash balance 4080 4085 4410 4 Income statement Sales (84000+89000+114000) 287000 Less:Cost of goods sold 215250 Gross profit 71750 Less:selling and administrative expenses Commission 34440 Rent 12300 Other expenses 17220 Interest expense (70+60) 130 Depreciation (760*3) 2280 66370 Net profit 5380 5 Balance sheet Assets Current assets: Cash 4410 Accounts reveivable (27200+114800-96400) 45600 (Beginning+Credit sales-collection towards credit sales) Inventory 39000 Long term assets Building and equipment (102000+3300-2280) (Beginning+new purchase-depreciation) 103020 Total 192030 Liabilities and stockholder's equity Accounts payable (30300+203850-206100) (Beginning+purchases-cash disbursement) 28050 Stockholder's equity: Capital stock 150000 Retained earnings (8600+5380) 13980 (Beginning+Net profit) Total 192030

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