Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 22, Problem 22.5BPR
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y8, the following tentative
| Cash | $ 26,000 | |
| Accounts Receivable | 23,800 | |
| 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 20Y8 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, 20Y8, 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 | — | B.40 |
| Factory overhead: | ||
| Depreciation of plant and equipment | $ 4,000 | — |
| Other factory overhead | 1,400 | 4.30 |
| 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 20Y8 taxable income will be paid during 20Y8. 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 20Y8.
- 2. Prepare a budgeted balance sheet as of December 31,20Y8, with supporting calculations.
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Chapter 22 Solutions
Accounting (Text Only)
Ch. 22 - Prob. 22.1DQCh. 22 - Briefly describe the type of human behavior...Ch. 22 - What behavioral problems are associated with...Ch. 22 - What behavioral problems are associated with...Ch. 22 - Under what circumstances is a static budget...Ch. 22 - How do computerized budgeting systems aid firms in...Ch. 22 - Why should the production requirements set forth...Ch. 22 - Why should the timing of direct materials...Ch. 22 - a. Discuss the purpose of the cash budget. b. If...Ch. 22 - Prob. 22.10DQ
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