SURVEY OF ACCOUNTING 360DAY CONNECT CAR
5th Edition
ISBN: 9781260591811
Author: Edmonds
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 14, Problem 2ATC
ATC7-2 Group Assignment
The following
Cash | $ 16,000 | |
Accounts receivable | 60,000 | |
Inventory | 40,000 | |
Store equipment | 200,000 | |
$ 76,800 | ||
Accounts payable | 72,000 | |
Line of credit loan | 100,000 | |
Common stock | 50,000 | |
17,200 | ||
Totals | $316,000 | $316,000 |
Required
- a. Divide the class into groups, each with four or five students. Organize the groups into three sections. Assign Task 1 to the first section, Task 2 to the second section, and Task 3 to the third section.
Group Tasks
- 1. Based on the following information, prepare a sales budget and a schedule of cash receipts for October, November, and December. Sales for October are expected to be $180,000, consisting of $40,000 in cash and $140,000 on credit. The company expects sales to increase at the rate of 10 percent per month. All accounts receivable are collected in the month following the sale.
- 2. Based on the following information, prepare a purchases budget and a schedule of cash payments for inventory purchases for October, November, and December. The inventory balance as of October 1 was $40,000. Cost of goods sold for October is expected to be $72,000. Cost of goods sold is expected to increase by 10 percent per month. The company expects to maintain a minimum ending inventory equal to 20 percent of the current month cost of goods sold. Seventy-five percent of accounts payable is paid in the month that the purchase occurs; the remaining 25 percent is paid in the following month.
- 3. Based on the following selling and administrative expenses budgeted for October, prepare a selling and administrative expenses budget for October, November, and December.
Sales commissions (10% increase per month) | $ 7,200 |
Supplies expense (10% Increase per month) | 1,800 |
Utilities (fixed) | 2,200 |
Depreciation on store equipment (fixed) | 1,600 |
Salary expense (fixed) | 34,000 |
Rent (fixed) | 6,000 |
Miscellaneous (fixed) | 1,000 |
Cash payments for sales commissions and utilities are made in the month following the one in which the expense is incurred. Supplies and other operating expenses are paid in cash in the month in which they are incurred.
- b. Select a representative from each section. Have the representatives supply the missing information in the following pro forma income statement and balance sheet for the fourth quarter of 2018. The statements are prepared as of December 31, 2018.
Income Statement | ||
Sales revenue | $ ? | |
Cost of goods sold | ? | |
Gross margin | 357,480 | |
Operating expenses | ? | |
Operating income | 193,290 | |
Interest expense | (2,530) | |
Net income | $190,760 | |
Balance Sheet | ||
Assets | ||
Cash | $ 9,760 | |
Accounts receivable | ? | |
Inventory | ? | |
Store equipment | $200,000 | |
Accumulated depreciation store equipment | ||
Book value of equipment | 118,400 | |
Total assets | $314,984 | |
Liabilities | ||
Accounts payable | ? | |
Utilities payable | ? | |
Sales commissions payable | ? | |
Line of credit | 23,936 | |
Equity | ||
Common stock | 50,000 | |
Retained earnings | ? | |
Total liabilities and equity | $314,984 |
- c. Indicate whether Havel will need to borrow money during October.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Problem 07-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019.
ZIGBY MANUFACTURINGEstimated Balance SheetMarch 31, 2019
Assets
Cash
$
54,000
Accounts receivable
354,375
Raw materials inventory
100,495
Finished goods inventory
333,000
Total current assets
841,870
Equipment
628,000
Accumulated depreciation
(164,000
)
Equipment, net
464,000
Total assets
$
1,305,870
Liabilities and Equity
Accounts payable
$
212,195
Short-term notes payable
26,000
Total current liabilities
238,195
Long-term note payable
514,000
Total liabilities
752,195
Common stock
349,000
Retained earnings
204,675
Total stockholders’ equity
553,675
Total liabilities and equity
$
1,305,870
To prepare a master budget for April, May, and June…
Relevant data from Picta Company’s operating budgets are presented below. The company’s financial year ends on 30 June. Quarter 1Quarter 2Sales$248,470$251,539Direct material purchases120,295128,832Direct labor76,55374,289Manufacturing overhead26,00024,400Selling and administration expenses33,50033,500Depreciation included in selling and administration expenses 2,000 2,500 Collection from customers230,524220,116Cash payments for purchases114,345118,346 Additional data:Equipment was sold in July for $8,000 and $4,500 in November. Dividends of $5,500 were paid in August. The beginning cash balance was $80,395 and a required minimum cash balance per quarter is $60,000. The company has a 15% open line of credit for $70 000 with their bank. Required: a) Use this information to prepare a cash budget for the first two quarters of the year. bi) Briefly comment on Picta Company’s expected cashflow position in the first two quarters of the year.
Required information
Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10]
[The following information applies to the questions displayed below.]
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
Beech Corporation
Balance Sheet
June 30
Assets
Cash
$ 86,000
Accounts receivable
138,000
Inventory
75,000
Plant and equipment, net of depreciation
229,000
Total assets
$ 528,000
Liabilities and Stockholders’ Equity
Accounts payable
$ 90,000
Common stock
351,000
Retained earnings
87,000
Total liabilities and stockholders’ equity
$ 528,000
Exercise 8-12 (Algo)
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $400,000, $420,000, $410,000, and $430,000,…
Chapter 14 Solutions
SURVEY OF ACCOUNTING 360DAY CONNECT CAR
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Budgeted income statement and supporting budgets The budget director of Jupiter Helmets Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for May: Prepare a cost of goods sold budget for May. Work in process at the beginning of May is estimated to be $4200. and work in process at the end of May is desired to be $3800.arrow_forwardPrepare a cost of goods sold budget for the Crest Hills Manufacturing Co. for the year ended December 31, 2016, from the following estimates. Inventories of production units: Direct materials purchased during the year, 854,000; beginning inventory of direct materials, 31,000; and ending inventory of direct materials, 26,000. Totals from other budgets included:arrow_forwardBudgeted income statement and supporting budgets The budget director of Jupiter Helmets Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for May: Prepare a direct matria1s purchases budget for May.arrow_forward
- Budgeted selling and administrative expenses for King Tire Co. In P7-2 for the year ended December 31, 2016, were as follows: Required: 1. Prepare a selling and administrative expense budget, in good form, for the year 2016. 2. Using the information above and the budgets prepared in P7-2, prepare a budgeted income statement for the year 2016, assuming an income tax rate of 40%.arrow_forwardBudgeted income statement and supporting budgets The budget director of Jupiter Helmets Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for May: Prepare a direct labor cost budget for May.arrow_forwardMonth BudgetedSales BudgetedPurchases Budgeted Cash Sales August $640,000 $420,000 $85,000 September $550,000 $550,000 $70,000 October $600,000 $500,000 $88,550 November $800,000 $600,000 $77,160 December $500,000 $450,000 $174,870 i) An analysis of the records shows that trade receivables are settled according to the following credit pattern, in accordance with the credit terms 4/30, n90:50% in the month of sale30% in the first month following the sale20% in the second month following the sale ii) Expected purchases include monthly cash purchases of 5%. All other purchases are on account. Accounts payable are settled as follows, in accordance with the credit terms –2/30, n60:60% in the month in which the inventory is purchased40% in the following month iii) Fixed operating expenses which accrue evenly throughout the year, are estimated to be $1,680,000 per annum, (including depreciation on non-current assets of $420,000 per annum) and is settled monthly. iv) Wages and…arrow_forward
- Please answer the first 3 parts Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-10] Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below: Minden CompanyBalance SheetApril 30 Assets Cash $ 9,200 Accounts receivable 76,250 Inventory 49,750 Buildings and equipment, net of depreciation 228,000 Total assets $ 363,200 Liabilities and Stockholders’ Equity Accounts payable $ 63,750 Note payable 23,900 Common stock 180,000 Retained earnings 95,550 Total liabilities and stockholders’ equity $ 363,200 The company is in the process of preparing a budget for May and has assembled the following data: Sales are budgeted at $227,000 for May. Of these sales, $68,100 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected…arrow_forwardProblem 8-27 Cash Collections; Cash Disbursements; Budgeted Balance Sheet [LO8-2, LO8-3, LO8-4, LO8-10] Deacon Company is a merchandising company that is preparing a budget for the three-month period ended June 30. The following information is available Deacon CompanyBalance SheetMarch 31 Assets Cash $ 55,400 Accounts receivable 41,200 Inventory 53,200 Buildings and equipment, net of depreciation 180,000 Total assets $ 329,800 Liabilities and Stockholders’ Equity Accounts payable $ 143,500 Common stock 70,000 Retained earnings 116,300 Total liabilities and stockholders’ equity $ 329,800 Budgeted Income Statements April May June Sales $ 144,000 $ 154,000 $ 174,000 Cost of goods sold 86,400 92,400 104,400 Gross margin 57,600 61,600 69,600 Selling and administrative expenses 20,300 21,800 24,800 Net operating income $ 37,300 $ 39,800 $ 44,800 Budgeting…arrow_forwardRelevant data from the Poster Company’s operating budgets are: Quarter 1 Quarter 2 Sales $208,470 $211,539 Direct material purchases 115,290 120,832 Direct labor 75,205 73,299 Manufacturing overhead 25,400 25,400 Selling and administrative expenses 33,400 33,400 Depreciation included in selling and administrative 1,400 1,100 Collections from customers 215,391 240,154 Cash payments for purchases 114,300 119,253 Additional data:Capital assets were sold in January for $9,000 and $4,600 in May.Dividends of $4,400 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $58,000. Use this information to prepare a cash budget for the first two quarters of the year: If an amount box does not require an entry, leave it blank. The Poster Company Cash Budget For the First Two Quarters Quarter 1 Quarter 2 Beginning Cash Balance $fill in the blank 2 $fill in the blank 3 Add: Cash Receipts Collections from…arrow_forward
- Problem 8-19 (Algo) Cash Budget; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-8, LO8-9, LO8-10] Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below: Minden CompanyBalance SheetApril 30 Assets Cash $ 18,700 Accounts receivable 70,250 Inventory 41,250 Buildings and equipment, net of depreciation 230,000 Total assets $ 360,200 Liabilities and Stockholders’ Equity Accounts payable $ 72,250 Note payable 13,700 Common stock 180,000 Retained earnings 94,250 Total liabilities and stockholders’ equity $ 360,200 The company is in the process of preparing a budget for May and has assembled the following data: Sales are budgeted at $214,000 for May. Of these sales, $64,200 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the remainder is collected in the following month. All of the…arrow_forwardE9-5A Budget Cash Flow The following various elements relate to Whitfield, Inc.'s cash budget for April of the current year. For each item, determine the amount of cash that Whitfield should receive or pay in April. a. At $28 each, unit sales are 5,000 and 6,000 for March and April, respectively. Total sales are typically 40% for cash and 60% on credit; 30% of credit sales are collected in the month of sale, with the balance collected in the following month. Uncollectible accounts are negligible. b. Merchandise purchases were $45,000 and $78,000 for March and April, respectively. Typically, 20% of total purchases are paid for in the month of purchase with a 5% cash discount. The balance of purchases is paid for (without discount) in the following month.…arrow_forward80. Presented below is the balance sheet of bbb Company as of December 31, 2015: Assets Liabilities & Equity Cash Php30,400 Income Tax payable Php 4,800 Accounts receivable 48,000 Inventory 17,600 Ordinary Shares 256,000 PPE 232,000 Retained Earnings 67,200 Total Assets Php328,000 Total L&E Php 328,000 The manager instructs you to update the balances based on the budget below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Sales Php112,000 Php128,000 Php144,000 Php140,800 Production Costs 76,800 80,000 89,600 80,000 Operating expenses 25,600…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
The management of receivables Introduction - ACCA Financial Management (FM); Author: OpenTuition;https://www.youtube.com/watch?v=tLmePnbC3ZQ;License: Standard YouTube License, CC-BY