Problem 8-31 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]

Hillyard Company, an office supplies 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:

1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

2. Actual sales for December and budgeted sales for the next four months are as follows:

3. Sales are 20% for cash and 80% 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.

4. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

5. Monthly expenses are budgeted as follows: salaries and wages, $29,000 per month: advertising, $67,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $44,340 for the quarter.

6. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.

7. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

8. During February, the company will purchase a new copy machine for $2,400 cash. During March, other equipment will be purchased for cash at a cost of $77,000.

9. During January, the company will declare and pay $45,000 in cash dividends.

10. Management wants to 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 would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the data above, complete the following statements and schedules for the first quarter:

1. Schedule of expected cash collections:

2-a. Merchandise purchases budget:

2-b. Schedule of expected cash disbursements for merchandise purchases:

3. Cash budget:

ABC INC, announces the following accounts and balances on 12/31/17:

Cash                            $15,000

Equipment (net)            20,000

Inventory                    85,000

Retained Earnings       30,000

Common Stock            90,000

During the first quarter [January _ March] of 2018 the business gauges they will sell 150 units of an item at a cost of $200 per unit. All units are sold on account. The business estimates the account receivable balance will be 15% of the sales revenue for the quarter. The business plans to buy 120 units of an item at a cost of $125 per unit during the quarter. They estimate the account payable balance will be 25% of the budgeted quarterly purchases at the end of the quarter. The business estimates selling & general/administrative expenses of $9,000 for the quarter ($500 of this amount is for depreciation expense).

Prepare a budgeted income statement for the first quarter of 2018 and a budgeted balance sheet as of 3/31/18.

Is there a linear correlation between students' high school GPA and their current GPA( College GPA)? Here is the link to our survey

1. Let's try to test this claim by using the survey. Assume that alpha is 0.05.

2. What is the equation of the regression line?

3. What is the best-predicted GPA if the high school GPA is 3.5?

Complete the following regarding statements regarding the Mid-Quarter Convention and how the multiplying factor is applied. Enter numerical values as a decimal to one decimal place, if required (i.e. 8.5). If 40% of the value of property, other than is placed in service during quarter of the year, the mid-quarter convention applies. Based on when the asset is placed in service, the first quarter is allowed months of cost recovery; the second quarter is allowed months of cost recovery; the third quarter is allowed months of cost recovery; and, the fourth quarter is allowed months of cost recovery.

Consider an economy where consumers spend C, businesses invest I, and there is no government for simplicity (TR = T = 0). In this economy we can write Consumption as: ? = ? + MPC∗GDP The economy also imports some amount of goods, but it does not export anything. We can represent imports (M) by the following: ? = ? + MPCF ∗ ?DP where MPCF can be thought of as the marginal propensity to consume foreign goods and F is the amount of imports that will occur even with no disposable income. (a) What is the total aggregate expenditure equation in this economy? What is the equilibrium condition? Solve for GDP* as a function of all other variables. Is the spending multiplier larger or smaller than our typical spending multiplier? Why is it larger or smaller? Explain the intuition behind the results. Is the spending multiplier larger or smaller than 1? Why is it larger or smaller? Explain the intuition behind the results.

Red Canyon T-shirt Company operates a chain of T-shirt shops in the southwestern United States. The sales manager has provided a sales forecast for the coming year, along with the following information:

Each T-shirt is expected to sell for $21.

The purchasing manager buys the T-shirts for $8 each.

The company needs to have enough T-shirts on hand at the end of each quarter to fill 31 percent of the next quarter’s sales demand.

Selling and administrative expenses are budgeted at $62,000 per quarter plus 18 percent of total sales revenue.

1. Determine budgeted sales revenue for each quarter.
Budgeted Sales Revenue  
Quarter1:

Quarter 2:

Quarter 3:

2. Determine budgeted cost of merchandise purchased for each quarter.
Budgeted Cost of Merchandise Purchased
Quarter1:

Quarter 2:

Quarter 3:

3. Determine budgeted cost of good sold for each quarter.
Budgeted Cost of Goods Sold
Quarter1:

Quarter 2:

Quarter 3:

4. Determine selling and administrative expenses for each quarter.

Budgeted Selling and Administrative Expenses

Quarter1:

Quarter 2:

Quarter 3:

Complete the budgeted income statement for each quarter.

Vaviano Ltd expects to sell 34,000 units of finished goods over the next 6-month period. The company has 10,000 units on hand and its managers want to have 14,000 units on hand at the end of the period. To produce one unit of finished product, two units of direct materials are needed. Vaviano has 100,000 units of direct material on hand and has budgeted for an ending inventory of 110,000 units.

What is the amount of direct material to be purchased (in units)?

Select one:

a. 38,000

b. none of these

c. 66,000

d. 86,000

e. 76,000

Super Solar Systems has forecast the following unit sales and production for the next year, by quarter.

Super Solar has the following beginning inventories.

A finished unit requires one kilogram of material A and two square metres of material B. There should be enough material on hand at the end of each quarter to meet 20% of the next quarter’s production needs. There are no work-in-process inventories.

What is the ending inventory for material A for quarter 2?

Select one:

a. 14 kilograms

b. none of these

c. 80 kilograms

d. 78 kilograms

e. 70 kilograms

Limelite Ltd, a retail store, projects sales for its first three months of operation as follows.

Inventory on 1 January is $40,000. Subsequent beginning inventories should be 40% of that month’s cost of goods sold. Goods are priced at 140% of their cost.

50% of purchases are paid for in the month of purchase; the balance is paid in the following month.

It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale and the balance the third month. A 5% discount is given if payment is received in the month following sale.

What are the anticipated cash receipts for February?

Select one:

a. $107,500

b. $238,000

c. $121,250

d. $71,250

e. None of these

1) The big problem with using prices as a ruler to measure the size of our economy and how fast it grows is:

2) A French couple purchases gasoline:

3) The purchase of a new home is considered: