ml 7 Problem 20-4A Manufacturing: Prepa ration of a complete master budget LO P1

Question

ml 7 Problem 20-4A Manufacturing: Prepa ration of a complete master budget LO P1, P2, P The mana ing prepared the following estimated balance sheet for March 2017 points 2017 $ 40,000 342,248 98, 500 325, 540 806,286 600,000 (150,000) 450, 000 S1,256,288 Accounts receivablo nventory Finíshed goods inventory Total current Equipment, gross Accunulated depreciation Equipment, net assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable s 200, 500 12,000 500,000 Common stock 335, 000 Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 201 7, management gathers the following information: units. Forecasted sales in units are as follows: April, 20,500: May 19,500: June, 20,000; and July 20.500. Sales of 240,.000 units are forecasted for the entire year. The product's selling price is $23.85 per unit and its total product K Prev 7 of 7i Next

Explanation / Answer

ZIGBY MANUFACTURING CASH BUDGET April, May and June 2017 April May June Beginning cash balance $40,000 $83,346 $118,295 Cash receipt from customers $488,925 $481,770 $468,653 Total cash available $528,925 $565,116 $586,948 Cash payments: Raw materials $200,500 $198,000 $201,500 Direct labor $147,750 $149,250 $153,000 Variable overhead $26,595 $26,865 $27,540 Sales commissions $39,114 $37,206 $38,160 Sales salaries $3,000 $3,000 $3,000 General & Administrative salaries $12,000 $12,000 $12,000 Dividends $10,000 Purchase of equipment $130,000 Interest on loan $120 Long-term note interest $4,500 $4,500 $4,500 Total cash payments $433,579 $440,821 $569,700 Preliminary cash balance $95,346 $124,295 $23,248 Additional loan (loan repayment) -$12,000 $16,752 Ending cash balance $83,346 $124,295 $40,000 Ending Short-term notes $0 $0 $16,752 Budgeted Income Statement For Three Months Ended June 30, 2017 Sales $1,431,000 Cost of goods sold $1,191,000 Gross profit $240,000 Less: Operating expense General & Admin Salaries $36,000 Sales commissions $114,480 Sales salaries $9,000 Long-term Note Interest $13,500 Short-term Note Interest $120 Total Operating Expenses $173,100 Income Before Taxes $66,900 Less: Income Tax @ 35% $23,415 Net Income $43,485 Budgeted Income Statement For Three Months Ended June 30, 2017 Assets Cash $40,000 Accounts receivables $333,900 Raw materials inventory $80,000 Finished goods inventory $325,540 Total current assets $779,440 Equipment $730,000 Accumulated depreciation $210,000 Equipment, net $520,000 Total assets $1,299,440 Liabilities and Equity Accounts payable $182,000 Bank loan payable $16,752 Income taxes payable $23,415 Total current liabilities $222,167 Long-term notes payable $500,000 Total liabilities $722,167 Common stock $335,000 Retained earnings $242,273 Total stockholder's equity $577,273 Total liabilities and equity $1,299,440

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