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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)...

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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. (h) Management would like to maintain a minimum cash balance of at least 
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$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. Required: 5. Prepare an absorption costing income statement, similar to the one shown in  Schedule 9 in the chapter, for the quarter ended June 30. 6. Prepare a balance sheet as of June30.
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Accounting-8089181.doc

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%...

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