acct 212 homework 6 chapter 23

Formworks
Company prepares monthly budgets. The current budget plans for a September
ending inventory of 19,000 units. Company policy is to end each month with
merchandise inventory equal to a specified percent of budgeted sales for the
following month. Budgeted sales and merchandise purchases for the three most
recent months follow.

Sales (Units)

Purchases (Units)

July

210,000

218,000

August

290,000

290,000

September

290,000

280,000

Section Break

Difficulty: Medium

Exercise 23-1 Preparation of merchandise purchases budgets (for three
periods) L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

1.

Prepare
the merchandise purchases budget for the months of July, August, and
September. (Input all amounts as positive
values. Omit the “%” sign in your response.)

Worksheet

Difficulty: Medium

Exercise 23-1 Part 1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

2.

Compute
the ratio of ending inventory to the next month’s sales for each budget
prepared in part 1.(Omit the “%” sign in
your response.)

Ratio
of ending inventory to next month sales

10 .gif” alt=”correct”> %

3.

How
many units are budgeted for sale in October?

Worksheet

Difficulty: Medium

Exercise 23-1 Part 3

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Kasik
Co. budgeted the following cash receipts and cash disbursements for the first
three months of next year.

Cash
Receipts

Cash
Disbursements

January

$

525,000

$

477,000

February

403,500

354,000

March

478,000

522,000

According
to a credit agreement with the company’s bank, Kasik promises to have a
minimum cash balance of $30,000 at each month-end. In return, the bank has
agreed that the company can borrow up to $160,000 at an annual interest rate
of 12%, paid on the last day of each month. The interest is computed based on
the beginning balance of the loan for the month. The company has a cash
balance of $30,000 and a loan balance of $60,000 at January 1.

Prepare
monthly cash budgets for each of the first three months of next year. (Input all amounts as positive values except negative
preliminary cash balance and repayment of loan to bank which should be
indicated by a minus sign. Leave no cells blank – be certain to enter
“0” wherever required. Omit the “$” sign in your
response.)

Worksheet

Difficulty: Medium

Exercise 23-2 Preparation of cash budgets (for three periods) L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Use the
following information to prepare the July cash budget for Sanchez Co. It
should show expected cash receipts and cash disbursements for the month and
the cash balance expected on July 31. (Input all amounts as positive values. Omit the
“$” sign in your response.)

a.

Beginning
cash balance on July 1: $75,000.

b.

Cash
receipts from sales: 40% is collected in the month of sale, 50% in the next
month, and 10% in the second month after sale (uncollectible accounts are
negligible and can be ignored). Sales amounts are: May (actual), $1,860,000;
June (actual), $1,250,000; and July (budgeted), $1,440,000.

c.

Payments
on merchandise purchases: 50% in the month of purchase and 50% in the month
following purchase. Purchases amounts are: June (actual), $500,000; and July
(budgeted), $760,000.

d.

Budgeted
cash disbursements for salaries in July: $180,000.

e.

Budgeted
depreciation expense for July: $15,000.

f.

Other
cash expenses budgeted for July: $180,000.

g.

Accrued
income taxes due in July: $90,000.

h.

Bank
loan interest due in July: $5,500.

Worksheet

Difficulty: Medium

Exercise 23-3 Preparation of a cash budget L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Following
information relates to Sanchez Co.

a.

Beginning
cash balance on July 1: $40,000.

b.

Cash
receipts from sales: 24% is collected in the month of sale, 50% in the next
month, and 26% in the second month after sale (uncollectible accounts are
negligible and can be ignored). Sales amounts are: May (actual), $1,376,000;
June (actual), $960,000; and July (budgeted), $1,120,000.

c.

Payments
on merchandise purchases: 48% in the month of purchase and 52% in the month
following purchase. Purchases amounts are: June (actual), $344,000; and July
(budgeted), $600,000.

d.

Budgeted
cash disbursements for salaries in July: $168,800.

e.

Budgeted
depreciation expense for July: $9,600.

f.

Other
cash expenses budgeted for July: $120,000.

g.

Accrued
income taxes due in July: $80,000 (related to June).

h.

Bank
loan interest due in July: $5,280.

Additional
Information:

a.

Cost of
goods sold is 35% of sales.

b.

Inventory
at the end of June is $64,000 and at the end of July is $272,000.

c.

Salaries
payable on June 30 are $40,000 and are expected to be $32,000 on July 31.

d.

The
equipment account balance is $1,280,000 on July 31. On June 30, the
accumulated depreciation on equipment is $224,000.

e.

The
$5,280 cash payment of interest represents the 1% monthly expense on a
long-term bank loan of $528,000.

f.

Income
taxes payable on July 31 are $151,312, and the income tax rate applicable to
the company is 35%.

g.

The
only other balance sheet accounts are: Common Stock, with a balance of $562,880
on June 30; and Retained Earnings, with a balance of $857,600 on June 30.

Prepare
a budgeted income statement for the month of July and a budgeted balance
sheet for July 31. (Be sure to list the
assets and liabilities in order of their liquidity. Input all amounts as
positive values. Omit the “$” sign in your response.)

Sand
Dollar Company purchases all merchandise on credit. It recently budgeted the
following month-end accounts payable balances and merchandise inventory
balances. Cash payments on accounts payable during each month are expected to
be: May, $1,300,000; June, $1,350,000; July, $1,300,000; and August,
$1,600,000.

rev: 04_30_2012

Accounts
Payable

Merchandise Inventory

May
31

$

130,000

$

220,000

June
30

150,000

400,000

July
31

300,000

200,000

August
31

130,000

300,000

1.

Compute
the budgeted amounts of merchandise purchases for June, July, and August. (Omit the “$” sign in your response.)

June

July

August

Budgeted
merchandise purchases

$ 1,370,000 .gif” alt=”correct”>

$ 1,450,000 .gif” alt=”correct”>

$ 1,430,000 .gif” alt=”correct”>

2.

Compute
the budgeted amounts of cost of goods sold for June, July, and August. (Omit the “$” sign in your response.)

June

July

August

Budgeted
cost of goods sold

$ 1,190,000 .gif” alt=”correct”>

$ 1,650,000 .gif” alt=”correct”>

$ 1,330,000 .gif” alt=”correct”>

Worksheet

Difficulty: Medium

Exercise 23-6 Computing budgeted pu

Sound
Check, a merchandising company specializing in home computer speakers,
budgets its monthly cost of goods sold to equal 70% of sales. Its inventory
policy calls for ending inventory in each month to equal 20% of the next
month’s budgeted cost of goods sold. All purchases are on credit, and 20% of
the purchases in a month is paid for in the same month. Another 30% is paid
for during the first month after purchase, and the remaining 50% is paid for
in the second month after purchase. The following sales budgets are set:
July, $300,000; August, $240,000; September, $270,000; October, $225,000; and
November, $215,000.

Section Break

Difficulty: Medium

Learning Objective: 23-P2 Link both operating and capital expenditures
budgets to budgeted financial statements.

Exercise 23-7 Computing budgeted accounts payable and purchases-sales
forecast in dollars L.O. P1, P2

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

(1)

Compute
the budgeted merchandise purchases for July, August, September, and
October. (Omit the “$” sign in your
response.)

July

August

September

October

Budgeted
merchandise purchases

$ 201,600 .gif” alt=”correct”>

$ 172,200 .gif” alt=”correct”>

$ 182,700 .gif” alt=”correct”>

$ 156,100 .gif” alt=”correct”>

Worksheet

Difficulty: Medium

Learning Objective: 23-P2 Link both operating and capital expenditures
budgets to budgeted financial statements.

Exercise 23-7 Part 1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

(2)

Compute
the budgeted payments on accounts payable for September and October. (Omit the “$” sign in your response.)

September

October

Budgeted
payments on accounts payable

$ 189,000 .gif” alt=”correct”>

$ 172,130 .gif” alt=”correct”>

Worksheet

Difficulty: Medium

Learning Objective: 23-P2 Link both operating and capital expenditures
budgets to budgeted financial statements.

Exercise 23-7 Part 2

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

(3)

Compute
the budgeted ending balances of accounts payable for September and October. (Omit the “$” sign in your response.)

September

October

Budgeted
ending balances of accounts payable

$ 232,260 .gif” alt=”correct”>

$ 216,230 .gif” alt=”correct”>

Worksheet

Difficulty: Medium

Learning Objective: 23-P2 Link both operating and capital expenditures
budgets to budgeted financial statements.

Exercise 23-7 Part 3

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Nascar
Company manufactures an innovative automobile transmission for electric cars.
Management predicts that ending inventory for the first quarter will be
39,100 units. The following unit sales of the transmissions are expected
during the rest of the year: second quarter, 220,000 units; third quarter,
488,000 units; and fourth quarter, 247,000 units. Company policy calls for
the ending inventory of a quarter to equal 30% of the next quarter’s budgeted
sales. Nascar Company reports direct materials requirements of 0.53
pounds per unit. It also aims to end each quarter with an ending
inventory of direct materials equal to 30% of next quarter’s budgeted
materials requirements. Direct materials cost $177 per unit.

Required:

Prepare
a direct materials budget for the second quarter. (Round your pounds per unit to 2 decimal places and
other answers to the nearest dollar amount. Amounts to be deducted
should be indicated with a minus sign. Omit the “$” & “lbs”
signs in your response.)

Worksheet

Difficulty: Medium

Exercise 23-9A Direct materials budget L.O. P3

Learning Objective: 23-P3 Appendix 23A-Prepare production and
manufacturing budgets.

Nascar
Company manufactures an innovative automobile transmission for electric cars.
Management predicts that ending inventory for the first quarter will be
37,600 units. The following unit sales of the transmissions are expected
during the rest of the year: second quarter, 221,000 units; third quarter,
487,000 units; and fourth quarter, 240,000 units. Company policy calls for
the ending inventory of a quarter to equal 32% of the next quarter’s budgeted
sales. Each transmission requires 3.5 direct labor hours, at a cost of $18.6
per hour.

Required:

Prepare
a direct labor budget for the second quarter. (Round per hour answers to 2 decimal places and other dollar values to
nearest whole dollar amount. Omit the “$” sign in your response.)

Worksheet

Jake
Company reports the following:

July

August

September

Sales

$

29,000

$

37,000

$

41,000

Purchases

17,110

21,830

29,000

Payments
for purchases are made in the month after purchase. Selling expenses are 20%
of sales, administrative expenses are 8% of sales, and both are paid in the
month of sale. Rent expense of $1,800 is paid monthly. Depreciation expense
is $1,600 per month.

Prepare
a schedule of budgeted cash disbursements for August and September. (Input all amounts as positive value. Omit the
“$” sign in your response.)

Worksheet

Difficulty: Medium

Exercise 23-11 Budgeted cash disbursements L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Emily
Company has sales on account and for cash. Specifically, 56% of its sales are
on account and 44% are for cash. Credit sales are collected in full in the
month following the sale. The company forecasts sales of $534,000 for April,
$544,000 for May, and $569,000 for June. The beginning balance of Accounts
Receivable is $299,400 on April 1.

Prepare
a schedule of budgeted cash receipts for April, May, and June. (Input all amounts as positive values. Omit the
“$” sign in your response.)

Worksheet

Difficulty: Medium

Exercise 23-12 Budgeted cash receipts L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Kaizen
Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken
to meet this requirement at a cost of 1% interest per month (paid monthly).
Any excess cash is used to repay loans at month-end. The cash balance on July
1 is $8,400 and the company has no outstanding loans. Forecasted cash
receipts (other than for loans received) and forecasted cash payments (other
than for loan or interest payments) are:

July

August

September

Cash
receipts

$

24,000

$

32,000

$

40,000

Cash
disbursements

28,000

30,000

32,000

Prepare
a cash budget for July, August, and September. (Input all amounts as positive values. Leave no cells blank
– be certain to enter “0” wherever required. Round your
intermediate calculations and final answers to the nearest dollar amount.
Omit the “$” sign in your response.)

Worksheet

Difficulty: Medium

Exercise 23-13 Cash budget L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

Fabrice
Corp. requires a minimum $7,900 cash balance. If necessary, loans are taken
to meet this requirement at a cost of 2% interest per month (paid monthly).
Any excess cash is used to repay loans at month-end. The cash balance on
October 1 is $7,900 and the company has an outstanding loan of $3,900.
Forecasted cash receipts (other than for loans received) and forecasted cash
payments (other than for loan or interest payments) follow.

October

November

December

Cash
receipts

$

23,900

$

17,900

$

21,900

Cash
disbursements

26,850

16,900

14,100

Prepare
a cash budget for October, November, and December. (Input all amounts as positive values. Leave no cells blank
– be certain to enter “0” wherever required. Round your
intermediate calculations and final answers to the nearest dollar amount.
Omit the “$” sign in your response.)

Worksheet

Difficulty: Medium

Exercise 23-14 Cash budget L.O. P1

Learning Objective: 23-P1 Prepare each component of a master budget
and link each to the budgeting process.

The
following information is available for Zhao Company:

a.

The
cash budget for March shows an ending bank loan of $18,000 and an ending cash
balance of $65,200.

b.

The
sales budget for March indicates sales of $136,000. Accounts receivable are
expected to be 65% of the current-month sales.

c.

The
merchandise purchases budget indicates that $90,600 in merchandise will be
purchased on account in March. Purchases on account are paid 100% in the
month following the purchase. Ending inventory for March is predicted to be
760 units at a cost of $35 each.

d.

The
budgeted income statement for March shows net income of $49,600. Depreciation
expense of $2,600 and $27,600 in income tax expense were used in computing
net income for March. Accrued taxes will be paid in April.

e.

The
balance sheet for February shows equipment of $82,400 with accumulated
depreciation of $31,600, common stock of $33,000, and ending retained
earnings of $9,600. There are no changes budgeted in the equipment or common
stock accounts.

Prepare
a budgeted balance sheet for March. (Be sure
to list the assets and liabilities in order of their liquidity. Input all
amounts as positive values. Omit the “$” sign your response.)

Worksheet

Difficulty: Medium

Exercise 23-17 Budgeted balance sheet L.O. P2

Learning Objective: 23-P2 Link both operating and capital expenditures
budgets to budgeted financial statements.

Zulu,
Inc., is preparing its master budget for the first quarter. The company sells
a single product at a price of $25 per unit. Sales (in units) are forecasted
at 41,000 for January, 61,000 for February, and 51,000 for March. Cost of
goods sold is $12 per unit. Other expense information for the first quarter
follows.

Commissions

10

%

of
sales

Rent

$

18,000

per
month

Advertising

14

%

of
sales

Office
salaries

$

71,000

per
month

Depreciation

$

55,000

per
month

Interest

14

%

annually
on a $250,000 note payable

Tax
rate

30

%

Prepare
a budgeted income statement for this first quarter. (Input all amounts as positive values. Do not round
intermediate calculations. Omit the “$” sign your response.)

Worksheet

Difficulty: Medium