Miken Company:The following data relate to the operations of Miken Comapny, a distributor of consumer goods.Accounts as of March 31: Cash $8,000 A/R $20,000 Inventory $36,000 Building & Equip (net) $120,000 A/P $21,750 Capital stock $150,000 Retained Earnings $12,250A. The gross margin is 25% of salesB. Actual and budgeted sales data: March (actual) $50,000 April $60,000 May $72,000 June $90,000 July $48,000C. Sales are 60% cash and 40% credit. Credit sales are collected in the month following sale. The A/R 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 COGSE. 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 A/P at March 31 are the result of March purchases of inventoryF. 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.G. Equipment costing $1,500 will be purchased for cash in AprilH. The company must maintain a minimum cash balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of the month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interst is paid only at the time of repayment of principal. (figure interest in whole months 1/12, 3/12, etc.)Using this information complete the following schedules:1. Schedules of expected cash collections2. Merchandise purchase budget3. Schedule of cash disbursments (merchandise)4. Schedule of cash disbursments (operating expenses)5. Cash budget
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