To prepare a master budget for April, May, and June of 2020, management gathers the following information:

1. Sales for March total 19,500 units. Forecasted sales in units are as follows: April 19,500 ; May 17,100; June 21,300; July 19,500. Sales of 248,000 units are forecasted for the entire year. The product’s selling price is $30.00 per unit and the total product cost is $24.60 per unit.

b. 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 15,600 units, which complies with the policy.

3. 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 4,395 units, which complies with this policy. The expected June 30 ending raw materials inventory is 4,800 units. Raw materials cost $20 per unit. Each finished unit requires .50 units of raw materials.

d. Each finished unit requires .50 hours of direct labor at a rate of $23.00 per hour.

e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $3.40 per direct labor hour. Depreciation of $27,020 per month is treated as fixed factory overhead.

f. Sales representatives’ commissions are 7% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $3,800 per month.

g. Monthly general and administrative expenses include $20,000 administrative salaries and .5% monthly interest on the long-term note payable.

h. The company expects 25% of sales to be for cash and the remaining 75% 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 $48,000. 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 $18,000 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 40% in the quarter and paid in the third calendar quarter.

m. Equipment purchases of $138,000 are budgeted for the last day of June.

14. The estimated balance sheet for the company as of March, 2020 is included on tab (C) .  

__________________________________________________________________________________

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 (April, May & June shown separately), except as otherwise noted. Round calculations to the nearest whole dollars.

pt 3

11. Budgeted Income statement for the entire second quarter (not for each month separately)

12. Budgeted Statement of Retained Earnings (For the entire second quarter)

13. Budgeted Balance Sheet

Use areas on these budget tabs or separate tabs to document any supporting calculations or assumptions needed to come up with the above information.

Information for Question: The ExpressEspresso Company roasts and sells high quality certified sustainable coffee beans. The final one pound bags of roasted whole coffee beans has two direct materials – coffee beans and packaging. ExpressEspresso is preparing budgets for the 4th quarter ending December 31, 2019. For each requirement below prepare budgets by month for October, November, and December, and a total budget for the quarter.

The previous year’s sales for the corresponding period were:

October 50,000 bags

November 55,000 bags

December 90,000 bags

January 75,000 bags

February 60,000 bags

The company expects the above volume of coffee sales to increase by 8% for the period October 2019 – February 2020. The budgeted selling price for 2019 is $19.50 per bag. The company expects 35% of its sales to be cash (COD) sales. The remaining 65% of sales will be made on credit.

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Question: The company desires to have finished goods inventory on hand at the end of each month equal to 10 percent of the following month's budgeted unit sales. On September 30, 2019, ExpressEspresso expects to have 5,350 bags of roasted coffee on hand.

Prepare a Production budget

Problem 9-6AA Entries for payroll transactions LO P2, P3, P5

Francisco Company has 10 employees, each of whom earns $3,100 per month and is paid on the last day of each month. All 10 have been employed continuously at this amount since January 1. On March 1, the following accounts and balances exist in its general ledger:

1. FICA—Social Security Taxes Payable, $3,844; FICA—Medicare Taxes Payable, $900. (The balances of these accounts represent total liabilities for both the employer's and employees' FICA taxes for the February payroll only.)
2. Employees' Federal Income Taxes Payable, $7,750 (liability for February only).
3. Federal Unemployment Taxes Payable, $372 (liability for January and February together).
4. State Unemployment Taxes Payable, $2,480 (liability for January and February together).

During March and April, the company had the following payroll transactions.

* FICA taxes are Social Security and Medicare, respectively.

Required:
Prepare journal entries to record the transactions and events for both March and April. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Southeast Bank invests in trading securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2016, the bank held as trading securities 280 shares of Eglan Company common stock that originally cost $7,560. At that time, these securities had a fair value of $7,280. During the fourth quarter, the bank engaged in the following trading securities transactions:

On December 31, 2016, the quoted market prices of the shares were as follows: Eglan Company, $53 per share; Farrell Company, $39 per share; and Gray Company, $41 per share.

Required:

Amount DescriptionsGain on Sale of Trading SecuritiesInvestment in Available-for-Sale SecuritiesInvestment in Trading Securities (at fair value)Investment in Trading Securities (at cost)Loss on Sale of Trading SecuritiesUnrealized Loss on Increase in Value of Trading Securities

Prepare journal entries to record the 2016 transactions for the fourth quarter.

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GENERAL JOURNAL

Show what the bank reports on its fourth quarter 2016 income statement for these trading securities. Additional Instructions

Show how the bank reports these trading securities on its balance sheet at the end of the fourth quarter of 2016. Additional Instructions

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year:

Each unit requires 0.65 direct labor-hours, and direct laborers are paid $12.00 per hour.

Required:

2. Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is not adjusted each quarter. Instead, assume that the company’s direct labor workforce consists of permanent employees who are guaranteed to be paid for at least 5,000 hours of work each quarter. If the number of required direct labor-hours is less than this number, the workers are paid for 5,000 hours anyway. Any hours worked in excess of 5,000 hours in a quarter are paid at the rate of 1.5 times the normal hourly rate for direct labor.

Required information [The following information applies to the questions displayed below.] 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: Beech Corporation Balance Sheet June 30 Assets Cash $ 96,000 Accounts receivable 139,000 Inventory 70,200 Plant and equipment, net of depreciation 228,000 Total assets $ 533,200 Liabilities and Stockholders’ Equity Accounts payable $ 89,000 Common stock 333,000 Retained earnings 111,200 Total liabilities and stockholders’ equity $ 533,200 Beech’s managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $390,000, $410,000, $400,000, and $420,000, respectively. 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. Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% 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. Monthly selling and administrative expenses are always $54,000. Each month $7,000 of this total amount is depreciation expense and the remaining $47,000 relates to expenses that are paid in the month they are incurred. 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. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. 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.

Required information

[The following information applies to the questions displayed below.]

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:

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

1. Estimated sales for July, August, September, and October will be $360,000, $380,000, $370,000, and $390,000, 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 60% 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 $48,000. Each month $7,000 of this total amount is depreciation expense and the remaining $41,000 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.

Required:

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

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

2-b. 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. ABC Company uses absorption costing in its GAAP financial statements and variable costing for its internal management reporting. .ABC Company has produced 20,000 cell phone covers in 2016, but only sold 18,000 cell phone covers. ABC Company had no beginning inventory and now has ending inventory of 2,000 cell phone covers. Which of the following are true?

A.    ABC Company will report higher income in its absorption income statement than in its variable income statement.

B.    ABC Company will report lower income in its absorption income statement than in its variable income statement.

C.    ABC Company will report the same income in its absorption and variable income statements.

D.    There is not enough information to know how absorption and variable costing income will compare.

2. Budgeted sales in Allen Company are given below:

Collections for sales on account follow a stable pattern as follows:

·   70% of a month's credit sales are collected in the month of sale and

·   30% are collected in the month following sale.

Given these data, the total of all collections for May should be:

A. $99,000

B. $107,000

C. $142,000

D. $178,000

3. XYZ Company sells goods to its customers on account and collects from customers evenly over 90 days. About 2% of the payments are written off as uncollectible each month. To forecast cash collections for its Cash Collections Budget for May, what information is needed?

A. The amount of sales expected in June

B. The amount of sales expected in March

C. The amount of production expected in June

D. The amount of production expected in March

4. ABC Company pays its suppliers for 60% of its purchases in the period of purchase and 40% in the following quarter.   Accounts payable at the beginning of the year was $30,000.

Based on the information above, what is the balance of accounts payable at the end of the year?

A. $40,000

B. $68,000

C. $58,000

D. $42,000