Question

Problem 8-29 Completing a Master Budget (LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, L08-10) The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,5ee Accounts receivable $ 20,eee Inventory $ 39,600 Building and equipment, net $127, zee Accounts payable $ 23,550 Common stock $150, eee Retained earnings $ 20,750 a. The gross margin is 25% of sales. b. Actual and budgeted sales data: March (actual) April May June July $50,000 $ 66,080 $ 71,000 $ 96.000 $ 47,eee < Prev 4 of 5 B Score answer > to search : 9 DELL

Answer 1

1)			Shilow company
			Schedule of Expected cash collections
			April	May	June	Quarter
Cash sales			39600	42600	57600	139800
credit sales			20,000	26400	28400	74,800
total collections			59600	69000	86000	214600
	Accounts receivable = 96000*40%=				38400
2)			Merchandise purchase budget
			April	May	June	Quarter
Budgeted cost of goods sold			49500	53250	72000	174750
Add Desired ending inventory			42600	57600	28,200	28,200
total needs			92100	110850	100200	202950
less beginning inventory			39,600	42,600	57,600	39,600
Required purchases			52,500	68,250	42,600	163,350
3)		Schedule of Cash disbursements-Merchandise purhcase
			April	May	June	Quarter
March purchases			23,550			23,550
April purchases			26250	26,250		52500
May purchases				34125	34,125	68250
June purchases					21300	21300
total disbursements			49,800	60375	55425	165,600
4)			Cash budget
			April	May	June	Quarter
Beginning cash balance			7,500	4,620	4,165	7,500
Add Cash collectiosn			59600	69000	86000	214600
total cas h available			67,100	73,620	90,165	222,100
less cash disbursements
for inventory			49,800	60375	55425	165,600
for expenses			14180	15080	19580	48840
for equipment			1,500	0	0	1,500
total cash disbursements			65,480	75455	75005	215,940
Excess(Deficiency)of cash			1,620	-1,835	15,160	6,160
Financing:
Borrowings			3,000	6,000	0	9,000
Repayments			0		-9,000	-9,000
interest			0		-210	-210
total financing			3,000	6,000	-9210	-210
Ending cash balance			4,620	4,165	5,950	5,950
	interest = 3000*1%*3=			90
		6000*1%*2=		120
				210
5)			income statement
	Sales					233000
	cost of goods sold
	Beginning inventor				39,600
	Add purchases				163,350
	goods available for sale				202,950
	ending inventory				28,200	174,750
	Gross margin					58,250
	Selling and administrative expense
	commissions				27960
	rent		(2300*3)		6900
	Depreciation		(954*3)		2862
	other expenses				13980	51702
	net operating					6,548
	interest expense					210
	net income					6,338
		Balance sheet
		Assets
		current assets
		Cash					5,950
		Accounts receivable					38,400
		inventory					28,200
		total current assets					72,550
		Building And equipment ,net					125838
		total Assets					198,388
		liabilities And stockholder 's Equity
		Accounts payable					21,300
		total current assets					21,300
		Stockholder's Equity
		Capital stock				150,000
		Retained earnings				27,088	177,088
		total liabilites & stockholders Equity					198,388