Concept explainers
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative
Cash……………. | $ 26,000 | |
Finished Goods.............................................. | 16,900 | |
Work in Process.............................................. | 4,200 | |
Materials.................................................... | 6,400 | |
Prepaid Expenses............................................ | 600 | |
Plant and Equipment......................................... | 82,000 | |
$ 32,000 | ||
Accounts Payable............................................ | 14,800 | |
Common Stock. $1.50 par..................................... | 30,000 | |
83,100 | ||
$159,900 | $159,900 |
Factory output and sales for 20Y9 are expected to total 3,800 units of product, which are to be sold at $120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.
Budget estimates of
Estimated Costs and Expenses | ||
Fixed | Variable | |
(Total for Year) | (Per Unit Sold) | |
Cost of goods manufactured and sold: | ||
Direct materials................................... | — | $30.00 |
Direct labor....................................... | — | 840 |
Factory overhead: | ||
Depreciation of plant and equipment............ | $ 4,000 | — |
Other factory overhead......................... | 1,400 | 4.80 |
Selling expenses: | ||
Sales salaries and commissions..................... | 12,800 | 13.50 |
Advertising....................................... | 13,200 | — |
Miscellaneous selling expense..................... | 1,000 | 2.50 |
Administrative expenses: | ||
Office and officers salaries......................... | 7,800 | 7.00 |
Supplies.......................................... | 500 | 1.20 |
Miscellaneous administrative expense.............. | 400 | 2.40 |
Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances, federal income tax of $35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $22,000 cash in May.
Instructions
- 1. Prepare a budgeted income statement for 20Y9.
- 2. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.
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Chapter 21 Solutions
Financial & Managerial Accounting
- Budgeted income statement and balance sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Mesa Publishing Co.: Factory output and sales for 20Y9 are expected to total 3,800 units of product, which are to be sold at 120 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows: Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of 35,000 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of 0.20 per share are expected to be declared and paid in March, June, September, and December on 20,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for 22,000 cash in May. Instructions Prepare a budgeted income statement for 20Y9. Prepare a budgeted balance sheet as of December 31, 20Y9, with supporting calculations.arrow_forwardf. PROBLEM 8-29 Completing a Master Budget LOB-2, LOB-4, LOB-7, LOB-B, LOB-9, LOB-10 The following data relate to the operations of Shilow Company, a wholesale distributor of con- sumer goods: g. h. b. Actual and budgeted sales data: a. The gross margin is 25% of sales. c. d. 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. 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). Equipment costing $1.500 will be purchased for cash in April. 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…arrow_forwardGarden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:1st Quarter 2nd Quarter 3rd Quarter 4th QuarterTotal cash receipts .............................. $180,000 $330,000 $210,000 $230,000Total cash disbursements .................... $260,000 $230,000 $220,000 $240,000The company’s beginning cash balance for the upcoming fiscal year will be $20,000. The company requiresa minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterlyinterest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repayits loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at thetime it is repaid. For simplicity, assume that interest is not compounded.Required:Prepare the company’s cash budget for the upcoming fiscal yeararrow_forward
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- Budgeted Income Statement and Balance Sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.: Cash $109,300 Accounts Receivable 201,100 Finished Goods 42,200 Work in Process 28,200 Materials 46,300 Prepaid Expenses 3,400 Plant and Equipment 524,600 Accumulated Depreciation—Plant and Equipment $225,600 Accounts Payable 167,500 Common Stock, $10 par 300,000 Retained Earnings 262,000 $955,100 $955,100 Factory output and sales for 20Y9 are expected to total 26,000 units of product, which are to be sold at $110 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating…arrow_forwardBudgeted Income Statement and Balance Sheet As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y4, the following tentative trial balance as of December 31, 20Y3, is prepared by the Accounting Department of Regina Soap Co.: Cash $119,200 Accounts Receivable 227,700 Finished Goods 47,800 Work in Process 31,900 Materials 52,400 Prepaid Expenses 3,900 Plant and Equipment 609,100 Accumulated Depreciation—Plant and Equipment $261,900 Accounts Payable 206,700 Common Stock, $10 par 300,000 Retained Earnings 323,400 $1,092,000 $1,092,000 Factory output and sales for 20Y4 are expected to total 29,000 units of product, which are to be sold at $90 per unit. The quantities and costs of the inventories at December 31, 20Y4, are expected to remain unchanged from the balances at the beginning of the year. Budget estimates of manufacturing costs and operating…arrow_forwardTodd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: April May Sales ………………………………………………. $150,000 $157,500 Merchandise purchases …………………………… 107,000 112,400 Operating expenses: Payroll …………………………………… 13,600 14,280 Advertising ………………………………… 5,400 5,700 Rent ………………………………………… 2,500 2,500 Depreciation ……………………………… 7,500 7,500 End of April balances: Cash ………………………………………… 30,000 Bank loan payable ………………………… 26,000 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month. (3)…arrow_forward
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