Question

Read Chapter 13 in Marshall et al., (2014).

Read the "Calculating Your Costs Per Visit" article.

1.Course Project Option 1 is to complete the questions on Case 10.13 for the company you selected.

2.Course Project Option 2 is to complete the following budgeting assignment:

Stillwater Video Company, Inc. produces and markets two popular video games, High Range and Star Boundary. The closing account balances on the company's balance sheet for the last year are as follows: Cash, $18,735; Accounts Receivable, $19,900; Materials Inventory, $18,510; Work in Process Inventory, $24,680; Finished Goods Inventory, $21,940; Prepaid Expenses, $3,420; Plant and Equipment, $262,800; Accumulated Depreciation-Plant and Equipment, $55,845; Other Assets, $9,480; Accounts Payable, $52,640; Mortgage Payable, $70,000; Common Stock, $90,000; and Retained Earnings, $110,980.

Operating budgets for the first quarter of the coming year show the following estimated costs: direct materials purchases, $58,100; direct materials usage, $62,400; direct labor expense, $42,880; overhead, $51,910; selling expenses, $35,820; general and administrative expenses, $60,240; cost of goods manufactured, $163,990; and cost of goods sold, $165,440. Estimated ending cash balances are as follows: January, $34,610; February, $60,190; and March, $54,802. The company will have no capital expenditures during the quarter.

Sales are projected to be $125,200 in January, $105,100 in February, and $112,600 in March. Accounts receivable are expected to double during the quarter, and accounts payable are expected to decrease by 20 percent. Mortgage payments for the quarter will total $6,000 of which $2,000 will be interest expense. Prepaid expenses are expected to go up by $20,000, and other assets are projected to increase by 50 percent over the budgeted period. Depreciation for plant and equipment (already included in the overhead budget) averages 5 percent of total plant and equipment for the year. Federal income taxes (34 percent of profits) are payable in April. The company pays no dividends.

Required:

1.Prepare a budgeted income statement for the quarter ended March 31.

2.Prepare a budgeted balance sheet as of March 31.​

Submission Instructions Submit the file using the Submit button above. Grading Criteria Your work will be graded according to the following rubric. Please do not hesitate to refer to the rubric before, during, and after completing your assignment. Option 1 Grading Rubric

Criteria Level 3 Level 2 Level 1

Depth of Answer Provides an in-depth answer with further elaboration. Provides an in-depth answer. Evidence of   Provides a brief answer lacking depth. Not enough

Critical thinking is evident throughout. some critical thinking information given. Little evidence of critical thinking

310 points 217 points 0 points

Option 2 Grading Rubric

Criteria Level 3 Level 2 Level 1

Budgeted Income Statement The income statement shows all required parts. The income statements show some of the The income statement does not show the

160 points required parts. 112 points. required parts. 0 points

Budgeted Balance Sheet The balance sheet shows all required parts. The balance sheet shows some of the required parts. The balance sheet does not show the   

150 points. 105 points. required parts. 0 points.

Answer 1

Answer :

Preliminary schedules:
	Materials Inventory
		Beginning balance		$ 18,510
		Direct materials purchases		58,100
		Direct materials available for use		$ 76,610
		Less direct materials used		62,400
		Ending balance		$ 14,210
	Work in Process Inventory
		Beginning balance		$ 24,680
		Added during period:
			Direct materials used		62,400
			Direct labor		42,880
			Overhead		51,910
		Total costs in production		$181,870
		Less cost of goods manufactured		163,990
		Ending balance		$ 17,880
	Finished Goods Inventory
		Beginning balance		$ 21,940
		Cost of goods manufactured		163,990
		Cost of goods available for sale		$185,930
		Less cost of goods sold		165,440
		Ending balance		$ 20,490

1.	Budgeted income statement prepared.
	Stillwater Video Company, Inc.
Budgeted Income Statement
For the Quarter Ended March 31
	Sales				$342,900
Less cost of goods sold				165,440
Gross margin				$177,460
Operating expenses
	Selling expenses		$35,820
	General and administrative expenses		60,240
	Total operating expenses				96,060
Income from operations				$ 81,400
Interest expense				2,000
Income before income taxes				$ 79,400
Income taxes expense (	34%	)				26,996
Net income				$ 52,404

2.	Budgeted balance sheet prepared.
	Stillwater Video Company, Inc.
Budgeted Balance Sheet
March 31
	Assets
Current assets
	Cash		$ 54,802
	Accounts receivable (	$19,900	×	2	)		39,800
	Materials inventory		14,210
	Work in process inventory		17,880
	Finished goods inventory		20,490
	Prepaid expenses (	$3,420	+	$20,000	)		23,420
	Total current assets				$170,602
Plant and equipment		$262,800
	Less accumulated depreciation		59,130		203,670
Other assets	(	$9,480	×	1.50	)				14,220
Total assets				$388,492
Liabilities
Current liabilities
	Accounts payable (	$52,640	×	0.80	)		$ 42,112
	Income taxes payable		26,996
	Total current liabilities				$ 69,108
Long-term liabilities
	Mortgage payable (	$70,000	–	$4,000	)				66,000
Total liabilities				$135,108
Stockholders' Equity
Common stock				$ 90,000
Retained earnings
	Beginning balance		$110,980
	Net income for period		52,404
	Retained earnings, March 31				163,384
Total stockholders' equity						253,384
Total liabilities and stockholders' equity						$388,492
Note: No dividends were paid.
*	Accumulated depreciation	=	$55,845	+ (	$262,800	×	0.05	÷	4	) =	$59,130