Question

In: Accounting

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017:

ZIGBY MANUFACTURING
Estimated Balance Sheet
March 31, 2017
Assets
Cash $ 40,000
Accounts receivable 342,248
Raw materials inventory 98,500
Finished goods inventory 325,540
Total current assets 806,288
Equipment, gross 600,000
Accumulated depreciation (150,000 )
Equipment, net 450,000
Total assets $ 1,256,288
Liabilities and Equity
Accounts payable $ 200,500
Short-term notes payable 12,000
Total current liabilities 212,500
Long-term note payable 500,000
Total liabilities 712,500
Common stock 335,000
Retained earnings 208,788
Total stockholders’ equity 543,788
Total liabilities and equity $ 1,256,288


To prepare a master budget for April, May, and June of 2017, management gathers the following information:

A. Sales for March total 20,500 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 cost is $19.85 per unit.

B. Company policy calls for a given month’s ending raw materials inventory to equal 50% of the next month’s materials requirements. The March 31 raw materials inventory is 4,925 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,000 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.

C. Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s expected unit sales. The March 31 finished goods inventory is 16,400 units, which complies with the policy.

D. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour.

E. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead.

F. Sales representatives’ commissions are 8% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $3,000.

G. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable.

H. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).

I. All raw materials purchases are on credit, and no payables arise from any other transactions. One month’s raw materials purchases are fully paid in the next month.

J. The minimum ending cash balance for all months is $40,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.

K. Dividends of $10,000 are to be declared and paid in May.

L. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid in the third calendar quarter.

M. Equipment purchases of $130,000 are budgeted for the last day of June.

Required:
Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.):

6. Selling expense budget

7. General and adminsrative expense budget.

9. Budget income statement for the entire second quarter (not for each month separately)

10. Budgeted balance sheet.

Solutions

Expert Solution


Related Solutions

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 51,000 Accounts receivable 483,600 Raw materials inventory 94,100 Finished goods inventory 443,520 Total current assets 1,072,220 Equipment, gross 622,000 Accumulated depreciation (161,000 ) Equipment, net 461,000 Total assets $ 1,533,220 Liabilities and Equity Accounts payable $ 211,400 Short-term notes payable 23,000 Total current liabilities 234,400 Long-term note payable 515,000 Total liabilities 749,400 Common stock 346,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 58,000 Accounts receivable 484,640 Raw materials inventory 91,290 Finished goods inventory 393,304 Total current assets 1,027,234 Equipment, gross 636,000 Accumulated depreciation (168,000 ) Equipment, net 468,000 Total assets $ 1,495,234 Liabilities and Equity Accounts payable $ 206,390 Short-term notes payable 30,000 Total current liabilities 236,390 Long-term note payable 525,000 Total liabilities 761,390 Common stock 353,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 51,000 Accounts receivable 483,600 Raw materials inventory 94,100 Finished goods inventory 443,520 Total current assets 1,072,220 Equipment, gross 622,000 Accumulated depreciation (161,000 ) Equipment, net 461,000 Total assets $ 1,533,220 Liabilities and Equity Accounts payable $ 211,400 Short-term notes payable 23,000 Total current liabilities 234,400 Long-term note payable 515,000 Total liabilities 749,400 Common stock 346,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 51,000 Accounts receivable 483,600 Raw materials inventory 94,100 Finished goods inventory 443,520 Total current assets 1,072,220 Equipment, gross 622,000 Accumulated depreciation (161,000 ) Equipment, net 461,000 Total assets $ 1,533,220 Liabilities and Equity Accounts payable $ 211,400 Short-term notes payable 23,000 Total current liabilities 234,400 Long-term note payable 515,000 Total liabilities 749,400 Common stock 346,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 53,000 Accounts receivable 392,400 Raw materials inventory 96,600 Finished goods inventory 313,920 Total current assets 855,920 Equipment, gross 626,000 Accumulated depreciation (163,000 ) Equipment, net 463,000 Total assets $ 1,318,920 Liabilities and Equity Accounts payable $ 204,800 Short-term notes payable 25,000 Total current liabilities 229,800 Long-term note payable 520,000 Total liabilities 749,800 Common stock 348,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 65,000 Accounts receivable 437,760 Raw materials inventory 90,200 Finished goods inventory 308,028 Total current assets 900,988 Equipment, gross 630,000 Accumulated depreciation (165,000 ) Equipment, net 465,000 Total assets $ 1,365,988 Liabilities and Equity Accounts payable $ 204,500 Short-term notes payable 27,000 Total current liabilities 231,500 Long-term note payable 515,000 Total liabilities 746,500 Common stock 350,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 99,000 Accounts receivable 500,250 Raw materials inventory 101,000 Finished goods inventory 402,500 Total current assets 1,102,750 Equipment, gross 618,000 Accumulated depreciation (159,000 ) Equipment, net 459,000 Total assets $ 1,561,750 Liabilities and Equity Accounts payable $ 209,700 Short-term notes payable 21,000 Total current liabilities 230,700 Long-term note payable 505,000 Total liabilities 735,700 Common stock 344,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 43,000 Accounts receivable 432,900 Raw materials inventory 86,198 Finished goods inventory 387,168 Total current assets 949,266 Equipment, gross 606,000 Accumulated depreciation (153,000 ) Equipment, net 453,000 Total assets $ 1,402,266 Liabilities and Equity Accounts payable $ 194,798 Short-term notes payable 15,000 Total current liabilities 209,798 Long-term note payable 500,000 Total liabilities 709,798 Common stock 338,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 54,000 Accounts receivable 354,375 Raw materials inventory 100,495 Finished goods inventory 333,000 Total current assets 841,870 Equipment, gross 628,000 Accumulated depreciation (164,000 ) Equipment, net 464,000 Total assets $ 1,305,870 Liabilities and Equity Accounts payable $ 212,195 Short-term notes payable 26,000 Total current liabilities 238,195 Long-term note payable 514,000 Total liabilities 752,195 Common stock 349,000...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING...
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017: ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 54,000 Accounts receivable 354,375 Raw materials inventory 100,495 Finished goods inventory 333,000 Total current assets 841,870 Equipment, gross 628,000 Accumulated depreciation (164,000 ) Equipment, net 464,000 Total assets $ 1,305,870 Liabilities and Equity Accounts payable $ 212,195 Short-term notes payable 26,000 Total current liabilities 238,195 Long-term note payable 514,000 Total liabilities 752,195 Common stock 349,000...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT