The following data relate to the operations of Shilow Company, a wholesale
distributor of consumer goods:
(a) The gross margin in 25% of sales
(b) Actual and budgeted sales data:
(c) 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.
(d) Each month’s ending inventory should equal 80% of the following month’s
budgeted cost of goods sold.
(e) 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.
(f) 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
(g) Equipment costing $1,500 will be purchased for cash in April.