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Posted by: Homeworkhelp
Price Quoted by Student: $12
Posted On: 2017-01-18 12:12:07
 
Question
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: 
 
 
P9-19 Shilow Company
 
 
Current assets as of March 31:
     Cash                                               $8,000  
     Accounts receivable                       $20,000
     Inventory                                        $36,000
  Buildings and equipment, net            $120,000
  Accounts payable                              $21,750  
  Capital stock                                      $150,000  
  Retained earnings                              $12,250

 
a. The gross margin is 25% of sales.
b. Actual and budgeted sales data:
March (actual)             $50,000  
  April                          $60,000  
  May                           $72,000  
  June                           $90,000  
  July                            $48,000
 
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 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.
f. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets.)
g. Equipment costing $1,500 will be purchased for cash in April.
h. 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 loans 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.

 
Requirement 1:
1. Complete the following schedule using the above data.
 
Requirement 2:
Complete the following using the above data
 
Requirement 3:
Complete the following using the above data.
 
Requirement 4:
Complete the following cash budget using the above data.
 
Requirement 5:
Prepare an absorption costing income statement, for the quarter ended June 30. 
 
Requirement 6:
Prepare a balance sheet as of June 30.
 
 
TUTORIAL PREVIEW

 
 
 
SHILOW COMPANY
 
 
 
 
 
Schedule of Expected Cash Collections
 
 
 
 
 
 
 
 
 
 
April
May
June
Quarter
Cash sales
 
$36,000
43200
54000
$133,200
Credit Sales
 
20,000
24000
28800
$72,800
Total collections
 
$56,000
67200
82800
$206,000
 
 
 
Correct!
Correct!
Correct!

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