1.

Schedule of expected cash collections:

Cash sales.................
Credit sales1..............
Total collections.........

April
May
June
$51,00
$54,00
0 *
0 $69,000
27,600 * 34,000 36,000
$78,60
$88,00 $105,00
0 *
0
0

Quarter
$174,00
0
97,600
$271,60
0

40% of the preceding months sales.

*Given.
1

2. Merchandise purchases budget:

April

Budgeted cost of goods

sold1.........................
Add desired ending
inventory2.................
Total needs..................
Less beginning
inventory..................
Required purchases. . . .

May
June
Quarter
$ 67,50
$63,750 *
0 * $86,250 $217,500
54,000 * 69,000
117,750 * 136,500
51,000 *

54,000
$ 82,50
$66,750 *
0

39,600
125,850

39,600
257,100

69,000

51,000

$56,850 $206,100

For April sales: $85,000 sales 75% cost ratio = $63,750.

At April 30: $67,500 80% = $54,000.

At June 30: July sales $66,000 75% cost ratio 80% =
$39,600.
2

*Given.
Schedule of expected cash disbursementsmerchandise
purchases
April
May
June
March purchases......... $30,67 *
April purchases........... 33,375 * $33,37 *
May purchases............
41,250 $41,25
June purchases............
28,425
Total disbursements.... $64,05 * $74,62 $69,67
0
5
5
*Given.

Quarter
$ 30,67 *
66,750 *
82,500
28,42
$208,35
0

Schedule of expected cash disbursementsselling and

administrative expenses

Commissions.............
Rent..........................
Other expenses.........
Total disbursements. .

April
May
June
$
$
10,200 * 10,800 $13,800
4,200 *
4,200
4,200
5,100 *
5,400
6,900
$19,500 * $20,400 $24,900

Quarter
$34,800
12,600
17,400
$64,800

*Given.
3. Cash budget:
Cash balance,
beginning.............

April

May

June

Quarter

$9,400 * $4,050 $4,025 $ 9,400

271,60
Add cash collections. . 78,600 * 88,000 105,000
0
281,00
Total cash available.
88,000 * 92,050 109,025
0
Less disbursements:
For inventory........
64,050 * 74,625 69,675 208,350
For expenses........
19,500 * 20,400 24,900 64,800
For equipment......
3,400 *
0
0
3,400
276,55
Total disbursements
86,950 * 95,025 94,575
0
Excess (deficiency)
of cash..................
1,050 * (2,975) 14,450
4,450
Financing:
Borrowings...........
3,000
7,000
0 10,000
Repayments.........
0
0 (10,000) (10,000)
Interest ($3,000
1% 3 + $7,000
1% 2)..........
0
0
(230)
(230)
Total financing.........
3,000
7,000 (10,230)
(230)
Cash balance,
ending.................. $4,050
$4,025 $4,220 $ 4,220
* Given.

4.

Shilow Company
Income Statement
For the Quarter Ended June 30
Sales ($85,000 + $90,000 +
$115,000).........................................
Cost of goods sold:
Beginning inventory (Given).............
Add purchases (Part 2)......................
Goods available for sale....................
Ending inventory (Part 2)..................
Gross margin.......................................
Selling and administrative expenses:
Commissions (Part 2)........................
Rent (Part 2).....................................
Depreciation ($747 3)...................
Other expenses (Part 2)....................
Net operating income..........................
Interest expense (Part 4).....................
Net income..........................................

$290,00
0
$
51,000
206,10
0
257,100
39,60
0 217,500 *
72,500
34,800
12,600
2,241
17,40
0

67,041
5,459
230
$ 5,229

*A simpler computation would be: $290,000 75% =

$166,500.

Problem 9-25 (continued)

6.

Shilow Company
Balance Sheet
June 30
Assets

Current assets:
Cash (Part 4)......................................................... $ 4,910
Accounts receivable ($90,000 40%).................. 36,000
Inventory (Part 2).................................................. 28,800
Total current assets................................................. 69,710
Building and equipmentnet
($120,000 + $1,500 $2,700).............................. 118,800
$188,51
Total assets.............................................................
0
Liabilities and Equity
Accounts payable (Part 2: $42,300
50%)...................................................
Stockholders equity:

$ 21,15
0

$150,00
Capital stock (Given)..........................
0
Retained earnings*.............................

17,360

Total liabilities and equity......................

* Retained earnings, beginning............. $12,250
Add net income..................................
5,110
Retained earnings, ending................. $17,360

167,36
0
$188,51
0