Question

Problem 8-29 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10] The following data relate...

Problem 8-29 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]

The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:

Current assets as of March 31:
Cash $

8,800

Accounts receivable $

25,200

Inventory $

47,400

Building and equipment, net $

114,000

Accounts payable $

28,425

Common stock $

150,000

Retained earnings $

16,975

  1. The gross margin is 25% of sales.

  2. Actual and budgeted sales data:

March (actual) $ 63,000
April $ 79,000
May $ 84,000
June $ 109,000
July $ 60,000
  1. 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.

  2. Each month’s ending inventory should equal 80% of the following month’s budgeted cost of goods sold.

  3. 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.

  4. Monthly expenses are as follows: commissions, 12% of sales; rent, $3,600 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $855 per month (includes depreciation on new assets).

  5. Equipment costing $2,800 will be purchased for cash in April.

  6. 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.

Required:

Using the preceding data:

1. Complete the schedule of expected cash collections.

2. Complete the merchandise purchases budget and the schedule of expected cash disbursements for merchandise purchases.

3. Complete the cash budget.

4. Prepare an absorption costing income statement for the quarter ended June 30.

5. Prepare a balance sheet as of June 30.

Homework Answers

Answer #1

Calculation:
Accounts Receivable = $109,000 * 40% = $43,600
Building and Equipment, Net = $114,000 + $2,800 - $2,565 = $114,235
Retained Earnings = $16,975 + $5,445 = $22,420

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:...
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,600 Accounts receivable $ 20,400 Inventory $ 40,200 Building and equipment, net $ 128,400 Accounts payable $ 23,925 Capital stock $ 150,000 Retained earnings $ 22,675 The gross margin is 25% of sales. Actual and budgeted sales data:    March (actual) $ 51,000 April $ 67,000 May $ 72,000 June $ 97,000 July $ 48,000   ...
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:...
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 8,100 Accounts receivable $ 22,400 Inventory $ 43,200 Building and equipment, net $ 129,600 Accounts payable $ 25,800 Common stock $ 150,000 Retained earnings $ 27,500 The gross margin is 25% of sales. Actual and budgeted sales data: March (actual) $ 56,000 April $ 72,000 May $ 77,000 June $ 102,000 July $ 53,000 Sales are...
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods:...
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash $ 7,600 Accounts receivable $ 20,400 Inventory $ 40,200 Building and equipment, net $ 128,400 Accounts payable $ 23,925 Capital stock $ 150,000 Retained earnings $ 22,675 The gross margin is 25% of sales. Actual and budgeted sales data:    March (actual) $ 51,000 April $ 67,000 May $ 72,000 June $ 97,000 July $ 48,000   ...
Problem 8-23 Schedule of Expected Cash Collections; Cash Budget [LO8-2, LO8-8] The president of the retailer...
Problem 8-23 Schedule of Expected Cash Collections; Cash Budget [LO8-2, LO8-8] The president of the retailer Prime Products has just approached the company’s bank with a request for a $51,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods as of March 31:   Cash $ 8,000   Accounts receivable 20,000   Inventory 36,000   Building and equipment, net 120,000   Accounts payable 21,750   Common shares 150,000   Retained earnings 12,250 a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows:   March (actual) $ 50,000   April $ 60,000   May $ 72,000   June $ 90,000   July $ 48,000 c. Sales are 60% for...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods as of March 31:   Cash $ 8,000   Accounts receivable 20,000   Inventory 36,000   Building and equipment, net 120,000   Accounts payable 21,750   Common shares 150,000   Retained earnings 12,250 a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows:   March (actual) $ 50,000   April $ 60,000   May $ 72,000   June $ 90,000   July $ 48,000 c. Sales are 60% for...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods...
The following data relate to the operations of Soper Company, a wholesale distributor of consumer goods as of March 31:   Cash $ 8,000   Accounts receivable 20,000   Inventory 36,000   Building and equipment, net 120,000   Accounts payable 21,750   Common shares 150,000   Retained earnings 12,250 a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows:   March (actual) $ 50,000   April $ 60,000   May $ 72,000   June $ 90,000   July $ 48,000 c. Sales are 60% for...
ABC Company, a retailer, prepares its master budget on a quarterly basis. The following data has...
ABC Company, a retailer, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master for the first quarter. a. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances. ASSETS LIABILITIES AND EQUITY Cash $ 47,000 Accounts Payable $ 92,000 Accounts Receivable 224,000 Capital Stock 500,000 Inventory 60,000 Retained Earnings 109,000 Buildings and Equipment (net of depreciation) 370,000 TOTAL ASSETS...
Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data...
Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master budget for the second quarter. a. As of March 31 (the end of the prior quarter), the company’s balance sheet showed the following account balances: Cash $9,000 Acct Receviable 48,000 Inventory 12,6000 Buildings & Equip. (net) 214,100 Acct. Payable 18,300 Common Stock 190,000 Retained Earnings 75,400 Totals 283,700 283,700 b. Sales for March total...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: Cash $ 47,000 Accounts receivable 205,600 Inventory 58,800 Buildings and equipment (net) 357,000 Accounts payable $ 87,225 Common stock 500,000 Retained earnings 81,175 $ 668,400 $ 668,400 Actual sales...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT