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Managerial Accounting

Problem 9-25

Schedule of Expected Cash Collections


April May June Quarter
Cash sales 60% 36000 43200 54000 133200
Credit sales 40% 20000 24000 28800 72800 collected in the month following sale
Total collections 56000 67200 82800 206000

Merchandise Purchases Budget


April May June Quarter
Budgeted cost of goods sold 45000 54000 67500 166500 sales*75%
Add desired ending inventory 43200 54000 28800 28800 next months cogs*80%
Total needs 88200 108000 96300 195300
Less beginning inventory 36000 43200 54000 36000 desired ending inv.
Required purchases 52200 64800 42300 159300

Schedule of Expected Cash Disbursements-Merchandise Purchases


April May June Quarter
March purchases 21750 21750
April purchases 26100 26100 52200 50%/50%
May purchases 32400 32400 64800
June purchases 21150 21150
Total disbursements 47850 58500 53550 159900

Schedule of Expected Cash Disbursements-Selling and Administrative Expenses


April May June Quarter 12% of sales
Commissions 7200 8640 10800 26640
Rent 2500 2500 2500 7500
Other expenses 3600 4320 5400 13320 6% of sales
Total disbursements 13300 15460 18700 47460

Cash Budget
April May June Quarter
Cash balance, beginning 8000 4350 4590 8000
Add cash collections 56000 67200 82800 206000
Total cash available 64000 71550 87390 222940
Less cash disbursements:
For inventory 47850 58500 53550 159900
For expenses 13300 15460 18700 47460
For equipment 1500 0 0 1500
Total cash disbursements 62650 73960 72250 208860
Excess (deficiency) of cash 1350 -2410 15140 14080
Financing:
Borrowings (at the beginning of mon.) 3000 7000 10000
Repayments (in the end of quart.) -10000 -10000
Interest -230 -230 (3000*1%)*3+(7000*1%)*2
Total financing 3000 7000 -10230 -230
Cash balance, ending 4350 4590 4910 4910

Shilow Company
Budgeted Income Statement
For The Quarter Ended June 30

Sales 222000
Cost of goods sold 166500
Gross margin 55500
Operating expenses:
Commissions 26640
Rent 7500
Other expenses 13320
Depreciation 2700
Total operating expenses: 50160
Operating net income 5340
Interest expense 230
Net income 5110

Shilow Company
Budgeted Balance Sheet
June 30, xx

Assets

Current assets:
Cash 4910
Accounts receivable 36000 40% of June sales
Inventory 28800 desired ending inv. June
Total current assets: 69710

Plant and equipment:


Building and equipment, net 118800 beginning bal. 120,000+purch eq 1500
Total plant and equipment: 118800 - depreciation quart. 2700

Total assets: 188510

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable 21150 50% of June purchases
Total current liabilities 21150

Stockholders' equity:
Capital stock 150000
Retained earnings 17360 beg.bal. 12,250+net income
Total stockholders' equity 167360

Total liabilities and stockholders' equity 188510