Problem 9-21 (120 minutes)

1. Schedule of expected cash collections:

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

April
May
$36,000* $ 43,200
20,000*
24,000
$56,000* $67,200

June
$54,000
28,800
$82,800

Quarter
$133,200
72,800
$206,000

June

Quarter

40% of the preceding months sales.

*Given.
2. Inventory purchases budget:
April
Budgeted cost of goods
sold1 ...............................
Add desired ending
inventory2........................
Total needs ..................
Less beginning inventory...
Required purchases ..........
1

May

$45,000* $ 54,000* $67,500 $166,500

43,200*
88,200*
36,000*
$52,200*

54,000
108,000
43,200
$64,800

28,800
28,800
96,300 195,300
54,000
36,000
$42,300 $159,300

For April sales: $60,000 sales 75% cost ratio = $45,000.

At April 30: $54,000 80% = $43,200.

At June 30: July sales $48,000 75% cost ratio 80% = $28,800.

*Given.
Schedule of Expected Cash Disbursements Purchases

March purchases............
April purchases ..............
May purchases ...............
June purchases ..............
Total disbursements ....
*Given.

April
$21,750*
26,100*
______
$47,850*

May
$26,100*
32,400
_______
$58,500

June

$32,400
21,150
$53,550

Quarter
$21,750*
52,200*
64,800
21,150
$159,900

Problem 9-21 (continued)

3.

Schedule of Expected Cash Disbursements Operating Expenses

Salaries and wages ..............

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

April
$ 7,200*
2,500*
3,600*
$13,300*

May
$ 8,640
2,500
4,320
$15,460

June
$10,800
2,500
5,400
$18,700

Quarter
$26,640
7,500
13,320
$47,460

April
$ 8,000*
56,000*
64,000*

May
$ 4,350
67,200
71,550

June
$ 4,590
82,800
87,390

Quarter
$ 8,000
206,000
214,000

53,550
18,700

72,250
15,140

159,900
47,460
1,500
208,860
5,140

*Given.
4. Cash budget:
Cash balance, beginning......
Add cash collections ............
Total cash available ...........
Less disbursements:
For inventory......................
For expenses.....................
For equipment ...................
Total................................
Excess (deficiency) of cash..
Financing:
Borrowing ..........................
Repayments ......................
Interest ..............................
Total financing ................
Cash balance, ending...........
1

47,850*
13,300*
1,500*
62,650*
1,350*
3,000

3,000
$ 4,350

$3,000 x 12% x 3/12 = $ 90

7,000 x 12% x 2/12 = 140
Total interest
$230

*Given.

58,500
15,460

73,960
(2,410)
7,000

7,000
$ 4,590

10,000
(10,000) (10,000)
(230)1
(230)
(10,230)
(230)
$ 4,910
$ 4,910

Problem 9-21 (continued)

5.
SHILOW COMPANY
Income Statement
For the Quarter Ended June 30
Sales ($60,000 + $72,000 + $90,000) .............
Less cost of goods sold:
Beginning inventory (Given) .........................
Add purchases (Part 2).................................
Goods available for sale ...............................
Ending inventory (Part 2) ..............................
Gross margin ...................................................
Less operating expenses:
Salaries and wages (Part 3) .........................
Rent (Part 3) .................................................
Depreciation ($900 x 3) ................................
Other expenses (Part 3) ...............................
Net operating income ......................................
Less interest expense (Part 4).........................
Net income ......................................................

$222,000
$ 36,000
159,300
195,300
28,800

26,640
7,500
2,700
13,320

166,500*
55,500

50,160
5,340
230
$ 5,110

*A simpler computation would be: $222,000 75% = $166,500.

Problem 9-21 (continued)

6.
SHILOW COMPANY
Balance Sheet
June 30
Assets
Current assets:
Cash (Part 4) .....................................................................
Accounts receivable ($90,000 x 40%) ...............................
Inventory (Part 2) ...............................................................
Total ................................................................................
Fixed assets net ($120,000 + $1,500 $2,700) ................
Total assets...........................................................................

$ 4,910
36,000
28,800
69,710
118,800
$188,510

Liabilities and Equity

$ 21,150
Accounts payable (Part 2: $42,300 50%) ........
Stockholdersequity:
Capital stock (Given) ....................................... $150,000
Retained earnings............................................
17,360* 167,360
Total liabilities and equity ..............................
$188,510
*Retained earnings, beginning .........................
Add net income ...............................................
Retained earnings, ending ..............................

$12,250
5,110
$17,360