Badlands, Inc. manufactures a household fan that sells for $25 per unit. All sales are on account, with 30 percent of sales collected in the month of sale and 70 percent collected in the following month. The data that follow were extracted from the company’s accounting records.

Badlands maintains a minimum cash balance of $20,000. Total payments in January 20x1 are budgeted at $220,000.

A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

March 20x1 sales are expected to total 8,500 units.

Finished-goods inventories are maintained at 30 percent of the following month’s sales.

The December 31, 20x0, balance sheet revealed the following selected figures: cash, $23,600; accounts receivable, $126,000; and finished goods, $24,000.

Required:

Determine the number of units that Badlands sold in December 20x0.

Compute the sales revenue for March 20x1.

Compute the total sales revenue to be reported on Badlands’ budgeted income statement for the first quarter of 20x1.

Determine the accounts receivable balance to be reported on the March 31, 20x1, budgeted balance sheet.

Calculate the number of units in the December 31, 20x0, finished-goods inventory.

Calculate the number of units of finished goods to be manufactured in January 20x1.

Calculate the financing required in January, if any, to maintain the firm’s minimum cash balance.

Badlands, Inc. manufactures a household fan that sells for $20 per unit. All sales are on account, with 45 percent of sales collected in the month of sale and 55 percent collected in the following month. The data that follow were extracted from the company’s accounting records.

• Badlands maintains a minimum cash balance of $30,000. Total payments in January 20x1 are budgeted at $205,000.
• A schedule of cash collections for January and February of 20x1 revealed the following receipts for the period:

  	Cash Receipts
  	January			February
  From December 31 accounts receivable	$	110,000
  From January sales		96,000		$	154,000
  From February sales					64,800

• March 20x1 sales are expected to total 11,000 units.
• Finished-goods inventories are maintained at 20 percent of the following month’s sales.
• The December 31, 20x0, balance sheet revealed the following selected figures: cash, $24,500; accounts receivable, $110,000; and finished goods, $25,350.

Required:

1. Determine the number of units that Badlands sold in December 20x0.

2. Compute the sales revenue for March 20x1.

3. Compute the total sales revenue to be reported on Badlands’ budgeted income statement for the first quarter of 20x1.

4. Determine the accounts receivable balance to be reported on the March 31, 20x1, budgeted balance sheet.

5. Calculate the number of units in the December 31, 20x0, finished-goods inventory.

6. Calculate the number of units of finished goods to be manufactured in January 20x1.

7. Calculate the financing required in January, if any, to maintain the firm’s minimum cash balance.

Explain why these misconceptions are not true:

• Most economies function on their Production possibilities curve.

• Savings lowers economic activity.

• Government budget debt and deficit mean the same thing.

• Decisions made in Washington D.C. have little impact on the economy.

• Government spending stimulates demand but will not affect inflation.

• The government can never shut down.

Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10]

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Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Exercise 8-12 (Algo)

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

1.

repare a schedule of expected cash collections for July, August, and September.

2a.

Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2b.

Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3.

Prepare an income statement that computes net operating income for the quarter ended September 30.

4.

Prepare a balance sheet as of September 30.

1. First, write out the equilibrium conditions in the Goods and Services market and the Loanable Funds Market for a closed economy (i.e. the “supply equals demand” equations for each).

2. As we’ve learned, a third market – the Labor Market – typically does not reach an equilibrium where supply of labor equals demand for labor. What do we call the “normal” unemployment rate that persists even when wages have [incompletely] adjusted?

3. Say that businesses in the economy collectively think that the markets in which they sell their goods will soon experience increasing demand. In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

4. Say that the government reduces the taxes it collects as a percent of interest income. In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

5. Say that businesses and households suspect that the rate of inflation in the economy will be higher in the future. In the loanable funds market, (a) which curve(s) do you expect to be affected, and (b) which direction(s) would those curves shift?

6. Name and briefly describe at least three determinants of an economy’s long-run level of output.

7. What do we call this specific long run level of output?

The following list includes all of the account balances from Blue and White Company's general ledger on December 31, 2020, after all the adjusting entries have been posted. The accounts are listed in alphabetical order, and all accounts have a normal balance. This was Blue and White Company's first year in business.

Instructions: Using the information provided above, prepare a multiple-step income statement, statement of owner's equity, and classified balance sheet for Blue and White Company for the fiscal year ending December 31, 2020. Enter your answer in the space provided below on Connect. The accounts in your financial statements should be in the proper format, but you do not need to align amounts in neat columns. DO NOT ABBREVIATE ACCOUNT TITLES.

Income Statements and Firm Performance: Variable and Absorption Costing

Jellison Company had the following operating data for its first two years of operations:

   Jellison produced 90,000 units in the first year and sold 80,000. In the second year, it produced 80,000 units and sold 90,000 units. The selling price per unit each year was $12. Jellison uses an actual costing system for product costing.

Required:

1. Prepare income statements for both years using absorption costing. If an amount is zero, enter "0".

Has firm performance, as measured by income, improved or declined from Year 1 to Year 2?
Improved

2. Prepare income statements for both years using variable costing. If an amount is zero, enter "0".

Has firm performance, as measured by income, improved or declined from Year 1 to Year 2?
Improved

3. Which method do you think most accurately measures firm performance?
Variable Costing

Gordon, Inc. makes toys and projects production to be 6100, 5900, 6000, and 5500 for the next four quarters. Direct materials are $8 per kit. Beginning Raw Material Inventory is $20,000 and the company desires to end each quarter with 25% of the material needed for the next two quarter's production. Direct Materials needed for production in the First Quarter of the following year is $45,000. Gordon desires a balance of $25,000 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 1.3 hours of direct labor at an average cost of $30 per hour. Each kit requires 1.25 machine hours. Manufacturing overhead is allocated using machine hours as the allocation base. Variable overhead is $50 per kit and fixed overhead is $30,000 in the first two quarters and $32,000 in the third and fourth quarter.

Prepare Gordon's direct material budget, direct labor budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for production, budgeted overhead costs, and predetermind overhead allocation rate to two decimal places. Round other amounts to the nearest whole number.

I am needing projections of profits of the next three quarters?

What would the return on investment be by the end of the second year?