After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility, Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 106,000 units of the Sport model and 43,000 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by 31 percent.

Cost Drivers and Cost Driver Volumes—CenterPoint Manufacturing Facility

Third Quarter Unit Cost Report, Activity-Based Costing—CenterPoint Manufacturing Facility

Required:

a. Compute the amount of overhead allocated to the Sport and the Pro drones for the first quarter using activity-based costing. Assume that all events are the same in the first quarter as in the third quarter except for the number of setup hours. Assume the cost of a setup hour remains at $900.

ABCD Corp prepares its master budget on a quarterly basis and has a September 30 year end. The following data and information has been prepared to help you prepare the master budget for the first quarter of the fiscal year (October thru December). Info provided as follows:

1.

Actual Sales for September, 2019 and projected sales for October, November and December, 2019 and January 2020 are as follows:

September $280,000

October $400,000

November $600,000

December $1,800,000

January $700,000

2.

Monthly sales are 32% on cash and 68% on credit. Customer payments on credit sales are collected as follows: 27% in the month of sale and 73% in the month following the month of sale.

3.

At September 30 ABCD Corp had outstanding accounts receivable of $190,400 and are a result of September credit sales. This amount will be collected as follows: 100% in October.

4.

ABCD Corp’s Gross Profit Percentage is 63%. Therefore Cost of Goods Sold comprise 37% of monthly sales.

5.

Monthly Expenses are budgeted as follows. All expense amounts are paid in the month they are incurred.

a. Sales and Wages: $31,000 per month

b. Advertising: $74,000 per month

c. Shipping: 7% of Sales

d. Miscellaneous Expenses: $10,000 + 6% of sales

6.

Depreciation Expense is expected to be $42,000 each quarter.

7.

ABCD’s Ending Inventory at September 30 is $44,400. Ending Inventory for October, November and December should equal 30% of the following month’s Cost of Goods Sold.

8.

60% of inventory purchases are paid for in the month of purchase; the remaining 40% paid for in the following month. At September 30 the Company still owed $72,000 to vendors for their September inventory purchases---this amount will be paid in October.

9.

During October, the company plans to purchase a new copy machine for $200,000 cash. During December, other equipment will be purchased for cash at a cost of $30,000.

10.

During November, the company will declare and pay $100,000 in cash dividends.

11.

ABCD’s Cash balance at September 30 is $40,000.

12.

Has an agreement with a local bank that allows them to borrow in increments of $1,000 at the beginning of each month. The interest rate on the on loans is 1% per month and for simplicity we’ll assume the loan is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of each quarter to the extent it has available funds exceeded the $40,000 minimum balance amount.

Prepare the following Schedules for October, November and December.

a. INVENTORY PURCHASES CASH DISBURSEMENTS BUDGET

b. CASH (RECEIPTS AND DISBURSEMENTS) BUDGET

ABCD Corp prepares its master budget on a quarterly basis and has a September 30 year end. The following data and information has been prepared to help you prepare the master budget for the first quarter of the fiscal year (October thru December). Info provided as follows:

1.

Actual Sales for September, 2019 and projected sales for October, November and December, 2019 and January 2020 are as follows:

September $280,000

October $400,000

November $600,000

December $1,800,000

January $700,000

2.

Monthly sales are 32% on cash and 68% on credit. Customer payments on credit sales are collected as follows: 27% in the month of sale and 73% in the month following the month of sale.

3.

At September 30 ABCD Corp had outstanding accounts receivable of $190,400 and are a result of September credit sales. This amount will be collected as follows: 100% in October.

4.

ABCD Corp’s Gross Profit Percentage is 63%. Therefore Cost of Goods Sold comprise 37% of monthly sales.

5.

Monthly Expenses are budgeted as follows. All expense amounts are paid in the month they are incurred.

a. Sales and Wages: $31,000 per month

b. Advertising: $74,000 per month

c. Shipping: 7% of Sales

d. Miscellaneous Expenses: $10,000 + 6% of sales

6.

Depreciation Expense is expected to be $42,000 each quarter.

7.

ABCD’s Ending Inventory at September 30 is $44,400. Ending Inventory for October, November and December should equal 30% of the following month’s Cost of Goods Sold.

8.

60% of inventory purchases are paid for in the month of purchase; the remaining 40% paid for in the following month. At September 30 the Company still owed $72,000 to vendors for their September inventory purchases---this amount will be paid in October.

9.

During October, the company plans to purchase a new copy machine for $200,000 cash. During December, other equipment will be purchased for cash at a cost of $30,000.

10.

During November, the company will declare and pay $100,000 in cash dividends.

11.

ABCD’s Cash balance at September 30 is $40,000.

12.

Has an agreement with a local bank that allows them to borrow in increments of $1,000 at the beginning of each month. The interest rate on the on loans is 1% per month and for simplicity we’ll assume the loan is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of each quarter to the extent it has available funds exceeded the $40,000 minimum balance amount.

Prepare the following Schedules for October, November and December.

a. EXPECTED CASH COLLECTIONS BUDGET

b. INVENTORY PURCHASES BUDGET

c. EXPENSE CASH DISBURSEMENT BUDGET (THIS BUDGET SHOULD INCLUDE TOTAL CASH DISBURSEMENTS FOR INVENTORY PURCHASES, SALARIES, ADVERTISING, SHIPPING AND MISCELLANEOUS EXPENSES)

Thornton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:

Problem 14-23 Part 1

Required

October sales are estimated to be $400,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 30 percent per month. Prepare a sales budget.

The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.

The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,500. Assume that all purchases are made on account. Prepare an inventory purchases budget.

The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.

Budgeted selling and administrative expenses per month follow:

*The capital expenditures budget indicates that Thornton will spend $167,000 on October 1 for store fixtures, which are expected to have a $35,000 salvage value and a two-year (24-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.

G. Thornton borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $27,000 cash cushion. Prepare a cash budget.

H. Prepare a pro forma income statement for the quarter.

I. Prepare a pro forma balance sheet at the end of the quarter.

J. Prepare a pro forma statement of cash flows for the quarter.

***I only need help with G-J. ***

Edmonds Company, a sports specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

Information from marketing regarding sales:

Actual Sales for December were $280,000. Sales Projections for January through April are:

• January: $400,000
• February: $500,000
• March: $300,000
• April: $200,000

Sales are 70% for cash and 30% 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. The company’s gross margin is 50% of sales. (In other words, cost of goods sold is 50% of sales.) Monthly expenses are budgeted as follows:

• salaries and wages, $27,000 per month
• advertising, $70,000 per month
• shipping, 5% of sales
• other expenses, 3% of sales

Depreciation, including depreciation on new assets acquired during the quarter, will be $42,000 for the quarter. Each month’s ending inventory should equal 40% of the following month’s cost of goods sold. The December 31 ending inventory can be found in the financial statement information above. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid the following month. The December purchases are the amount of Accounts Payable shown in the financial statement information above.

During February, the company will purchase a new t-shirt making machine for $150,000 cash. During March, other equipment will be purchased for cash at a cost of $90,000. During January, the company will declare and pay $55,000 in cash dividends. Management MUST maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company - if it is able will repay loans in total.

Prepare the following in good form (meaning clearly labeled) for January, February and March using Excel.

1. Schedule of Cash Collections (5 points)
2. A Schedule of Merchandise Purchases (also called Merchandise Purchase Budget) (10 points)
3. A Schedule of Cash Disbursements for Inventory Purchases (10 points)
4. A Schedule of Cash Disbursements for Expenses (10 points)
5. Cash Budget (10 points)
6. Indicate the amount borrowed and load balance ignoring interest (5 points)

Problem 7-23B Preparing a master budget for a retail company with no beginning account balances

Inwood Gifts Corporation begins business today, December 31, 2017. Rebecca Ortiz, the president, is trying to prepare the company’s master budget for the first three months (January, February, and March) of 2018. Since you are her good friend and an accounting student, Ms. Ortiz asks you to prepare the budget based on the following specifications:

Required

January sales are estimated to be $500,000, of which 30 percent will be cash and 70 percent will be credit. The company expects sales to increase at the rate of 10 percent per month. Prepare a sales budget.

The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.

The cost of goods sold is 50 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. The ending inventory of March is expected to be $66,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases.

Budgeted selling and administrative expenses per month follow:

Use this information to prepare a selling and administrative expenses budget.

Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.

The company borrows funds, in increments of $1,000, and repays them in any amount available on the last day of the month. It pays interest of 1.5 percent per month in cash on the last day of the month. For safety, the company desires to maintain a $100,000 cash cushion. The company pays its vendors on the last day of the month. Prepare a cash budget.

Prepare a pro forma income statement for the quarter.

Prepare a pro forma balance sheet at the end of the quarter.

Prepare a pro forma statement of cash flows for the quarter.

Vernon Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks: Problem 7-23A Part 1 Required October sales are estimated to be $280,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,600. Assume that all purchases are made on account. Prepare an inventory purchases budget. The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases. Budgeted selling and administrative expenses per month follow: Salary expense (fixed) $ 19,600 Sales commissions 5 % of Sales Supplies expense 2 % of Sales Utilities (fixed) $ 3,000 Depreciation on store fixtures (fixed)* $ 5,600 Rent (fixed) $ 6,400 Miscellaneous (fixed) $ 2,800 *The capital expenditures budget indicates that Vernon will spend $237,600 on October 1 for store fixtures, which are expected to have a $36,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. Vernon borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $28,000 cash cushion. Prepare a cash budget. Problem 7-23A Part 2 Prepare a pro forma income statement for the quarter. Prepare a pro forma balance sheet at the end of the quarter. Prepare a pro forma statement of cash flows for the quarter.

Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:

Problem 14-23 Part 1

Required

A.October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget.

B.The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.

C The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

D The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.

E Budgeted selling and administrative expenses per month follow:

*The capital expenditures budget indicates that Adams will spend $164,000 on October 1 for store fixtures, which are expected to have a $20,000 salvage value and a three-year (36-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.

Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget.

H.Prepare a pro forma income statement for the quarter.

I. Prepare a pro forma balance sheet at the end of the quarter.

J. Prepare a pro forma statement of cash flows for the quarter.

Munoz Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:

Required

1. October sales are estimated to be $400,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.

2. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.

3. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,900. Assume that all purchases are made on account. Prepare an inventory purchases budget.

4. The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases.

5. Budgeted selling and administrative expenses per month follow:

*The capital expenditures budget indicates that Munoz will spend $180,600 on October 1 for store fixtures, which are expected to have a $39,000 salvage value and a two-year (24-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

6. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses.

7. Munoz borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $31,000 cash cushion. Prepare a cash budget.

8. Prepare a pro forma income statement for the quarter.

9. Prepare a pro forma balance sheet at the end of the quarter.

10. Prepare a pro forma statement of cash flows for the quarter.

Presented below are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021.

Additional Information:

1. The notes receivable, along with any accrued interest, are due on November 22, 2022.
2. The notes payable are due in 2025. Interest is payable annually.
3. The investment in debt securities consist of treasury bills, all of which mature next year.
4. Deferred revenue will be recognized as revenue equally over the next two years.

Required:
Determine the company’s working capital (current assets minus current liabilities) at December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)