REQUIREMENTS: Using the preceding data, complete the following statements and sc
ID: 2578767 • Letter: R
Question
REQUIREMENTS: Using the preceding data, complete the following statements and schedules for the first quarter:
1. Income statement for the quarter ending March 31 as shown in Schedule 9 in the chapter.
2. Balance sheet as of March 31.
NAFTA Maybe Inc, a plastic injections mold company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Debits $48,000 $224,000 $60,000 $370,000 Credits Cash Accounts Receivable Inventory Building and Equipment Accounts Payable Capital Shares Retained Earnings $93,000 $500,000 $109,000 $702,000 $702,000 b. Actual sales for December and budgeted sales for the next four months are as follows Month December (actual) anuary February March April Sales $280,000 $500,000 $400,000 $300,000 $200,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales e. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $70,000 per month; shipping, 5% of sales; depreciation, $14,000 per month; other expenses, 3% of sales. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. f. g. One-half of a month's inventory purchases are paid for in the month of purchase; the other half are paid for in the following month.Explanation / Answer
NAFTA Maybe Inc. Sales Budget Jan Feb Mar Total April Sales $ 500000 400000 300000 1200000 200000 Cash collections from customers Cash sales of the month 20% 100000 80000 60000 240000 80% of previous month 224000 400000 320000 944000 240000 Total collections 324000 480000 380000 1184000 Purchases budget Sales Budgeted 500000 400000 300000 1200000 200000 COGS 60%*sales 300000 240000 180000 720000 120000 Add: Closing Inventory 60000 45000 30000 30000 Total Inventory Needed 360000 285000 210000 750000 Less: Op.inv. Available(Jan-Given) 60000 60000 45000 60000 30000 Purchases budgeted 300000 225000 165000 690000 Payment for purchases: 1st 50% 150000 112500 82500 345000 2nd 50% 93000 150000 112500 355500 82500 Total payment 243000 262500 195000 700500 Cash Budget Beginning balance 48000 -8000 80500 48000 Total collections 324000 480000 380000 1184000 Total cash available 372000 472000 460500 1232000 Disbursements: Payment for Purchases 243000 262500 195000 700500 Salaries& wages 27000 27000 27000 81000 Advertising 70000 70000 70000 210000 Shipping 5%*sales 25000 20000 15000 60000 Other expe.3%*Sales 15000 12000 9000 36000 Total disbursements 380000 391500 316000 1087500 Ending balance -8000 80500 144500 144500 Income statement for the Qtr. Ending Mar. Sales 1200000 Less: COGS 720000 Gross Margin 480000 Less: Operating expenses Salaries& wages 81000 Advertising 210000 Shipping 5%*sales 60000 Other expe.3%*Sales 36000 Depn. 14000*3 42000 429000 Operating Income 51000 Balance sheet as at Mar 31 Cash 144500 Accounts receivable 240000 Inventory 30000 Building& Equipment(370000-42000) 328000 Accounts Payable 82500 Capital shares 500000 Retained Earnings(109000+51000) 160000 742500 742500
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