9-20 Solution Pt 3 - The following data relate to the...

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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 new assets). (g) Equipment costing $1,500 will be purchased for cash in April.

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