This course contains a Course Project, which will be due at the end of Week 7. There is a template for the project: Link to Course Project TemplateLinks to an external site.Open this document with Rea Original Papers

This course contains a Course Project, which will be due at the end of Week 7. There is a template for the project:

Link to Course Project TemplateLinks to an external site.Open this document with ReadSpeaker docReader Links to an external site. 

The key information and instructions related to the project is listed below:

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

1. The gross margin is 25% of sales.
2. Actual and budgeted sales data:

Current Assets 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 stock: $150,000 Retained earnings: $12,250

 Monthly Data (likely sales or revenue): March (actual): $50,000 April: $60,000 May: $72,000 June: $90,000 July: $48,000

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, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month (includes depreciation on new assets).
5. Equipment costing $1,500 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.

Using the data provided above, use the Excel Template provided to prepare the following budget schedules:

1. Sales Budget (Merely enter the sales data provided.)
2. Schedule of Expected Cash Collections
3. Merchandise Purchases Budget
4. Schedule of Expected Cash Disbursements – Merchandise Purchases
5. Schedule of Expected Cash Disbursements – Selling and Administrative Expenses
6. Cash Budget