The following data relate to the operations of Shilow Compan y, a wholesale dist
ID: 2540548 • Letter: T
Question
The following data relate to the operations of Shilow Compan y, a wholesale distributor of consumer goods current assets as of March 31 Cash Accounts receivable $ 7,500 20,000 39,600 127,200 s 23,550 150,000 20,750 Buiiding and equipment, net Accounts payable n toek Retained earninge a. The gross margin is 25% of sales. b. Actual and budgeted sales date: Hareh (actual April May June July 50,000 s 66,000 71,000 96,000 47,000 March c. Sales are 60% for cash and 40%on credit. Credit sales are collected in the month following sale. The accounts receivable at 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 c. Sales are 60% for cash and 40% on cred, Cr.Explanation / Answer
Shallow Company Cash Budget April May June Quarter Beginning Cash Balance 7,500 4,620 5,165 7,500 Add: Collection from Customers 59,600 69,000 86,000 2,14,600 Total Cash available 67,100 73,620 91,165 2,22,100 Less: Cash disbursements: For Inventory 49,800 60,375 84,225 1,94,400 For Expenses 14,180 15,080 19,580 48,840 For Equipement 1,500 - - 1,500 Total Cash disbursement 65,480 75,455 1,03,805 2,44,740 Excess (defeciency ) of cash available over disbursement 1,620 -1,835 -12,640 -22,640 Financing: Borrowing 3,000 7,000 10,000 20,000 Repayment 20,200 Ineterest 30 70 100 200 Total financing 3,030 7,070 10,100 20,200 End Cash Balance 4,620 5,165 -2,640 -2,640 Collection from Customers May June April 26400 May 42600 May 28400 June 57600 69000 86000 Invenory April May June Opening April (66000x75%x80%) 36000 May (71000x75%x80%) 42600 June( 96000x75%/80%) 57600 Add: Purchase 52500 68250 100200 88500 110850 100200 Less: Sold 45900 53250 72000 Closing 42600 57600 28200 Expenses April May June Commission 8520 11520 Rent 2300 2300 Other Expense 4260 5760 Total 15080 19580