Apparently a shark can smell blood up to a quarter of a mile away. How does smell travel in water? It would seem strange that if you drop ink in water it takes ages to dissipate so how can the individual particles of a smell travel so far and apparently so fast?

Lanthrop, Inc., has had a successful year and projections look good for the next quarter. The management team is examining a plan to expand services to an additional city. Can the current system meet the additional demands? What types of information would be needed to make the decision?

From a business perspective, what is the concept of capacity? Provide 2 examples.

Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2018:

	April			May			June
Credit sales	$	315,000		$	295,000		$	355,000
Credit purchases		123,000			146,000			171,000
Cash disbursements
Wages, taxes, and expenses		43,500			11,000			62,500
Interest		10,500			10,500			10,500
Equipment purchases		75,000			140,000			0

The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.

In March 2018, credit sales were $185,000 and credit purchases were $125,000. Using this information, complete the following cash budget: (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015: April May June Credit sales $ 311,000 $ 291,000 $ 351,000 Credit purchases 119,000 142,000 167,000 Cash disbursements Wages, taxes, and expenses 43,100 10,600 62,100 Interest 10,100 10,100 10,100 Equipment purchases 71,000 132,000 0 The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2015, credit sales were $181,000 and credit purchases were $121,000.

Using this information, complete the following cash budget: (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

April May June Beginning cash balance $ 114,000 $ $ Cash receipts

Cash collections from credit sales

Total cash available $ $ $

Cash disbursements Purchases $ $ $

Wages, taxes, and expenses Interest

Equipment purchases

Total cash disbursements $ $ $

Ending cash balance $ $ $

Kellybrook Gallery is preparing its budgets for the quarter ending 31March. The following data is provided.

Actual Sales:                                     Forecast Sales:

November	December
$75,800	$102,500

January	February	March
$85,000	$60,000	$65,000

40% of all sales are on credit. Estimated collections are:

• 50% are collected in the month of sale, with a 3% discount,
• 30% in the month following sale, and
• 18% in the second month after sale.
• 2% will be written-off as Bad Debts
• Purchases are estimated at 60% of budgeted sales for the following month.
• 80% of these purchases are paid in the month of purchase and a 2% discount is received;
• 20% of purchases are paid in the following month.

Budgeted cash expenses in January are as follows:

Advertising	$500
Salaries/Wages	$8,000
Rent	$3,740
Interest on Mortgage	$475
General Expenses	$2,400

Salaries and wages will increase by 8% as of 1 February. Other cash expenses will remain the same for February and March.

Drawings by the owner amount to $7,000 per month.

The net GST Payable for the December quarter is $4,800. This amount is to be paid by the end of January.

Then Bank account balance at 1 January is $7,400.

Required: Prepare a cash budget for the months of January, February and March.

A payroll summary for Mark Consulting Company, owned by Mark Fronke, for the quarter ending June 30, 2019, appears below. The firm made the required tax deposits as follows

1. For April taxes, paid on May 15.
2. For May taxes, paid on June 17.
   

Date Wages Paid			Total Earnings			Social Security Tax Deducted			Medicare Tax Deducted			Income Tax Withheld
April	8		$	2,372.00		$	147.06		$	34.39		$	235.00
	15			2,460.00			152.52			35.67			242.00
	22			2,372.00			147.06			34.39			235.00
	29			2,416.00			149.79			35.03			239.00
			$	9,620.00		$	596.43		$	139.48		$	951.00
May	5		$	2,328.00		$	144.34		$	33.76		$	231.00
	12			2,372.00			147.06			34.39			235.00
	19			2,372.00			147.06			34.39			235.00
	26			2,416.00			149.79			35.03			239.00
			$	9,488.00		$	588.25		$	137.57		$	940.00
June	2		$	2,460.00		$	152.52		$	35.67		$	242.00
	9			2,372.00			147.06			34.39			235.00
	16			2,416.00			149.79			35.03			239.00
	23			2,372.00			147.06			34.39			235.00
	30			2,328.00			144.34			33.76			231.00
			$	11,948.00		$	740.77		$	173.24		$	1,182.00
Total			$	31,056.00		$	1,925.45		$	450.29		$	3,073.00

Social security	6.2	percent
Medicare	1.45
FUTA	0.6
SUTA	5.4

Required:

1. Using the tax rates given above, and assuming that all earnings are taxable, make the general journal entry on April 8, 2019, to record the employer’s payroll tax expense on the payroll ending that date.
2. Prepare the entries in general journal form to record deposit of the employee income tax withheld and the social security and Medicare taxes (employee and employer shares) on May 15 for April taxes and on June 17 for May taxes.

PLEASE INCLUDE EXCEL FORMULAS OR WORK

• Prepare (7) operating budgets for the year by quarter & budgeted Income Statement for the Candy business
• Sales Information:
  • Company advertises that it will match the competition (Internal factor)
  • Five year historical selling total units per year: 220k, 210k, 180k, 196k, & 200k
  • Surrounding shopping area includes discount stores (i.e. Target, Walmart) selling similar product for $15, $20 respectively (external factor)
  • Stock Market down 25% in last 3 months, oil per barrel at record low (external factor)
  • Prepare a budget with the following:
    • Sales in units Q1 – 20,000, Q2 – 40,000, Q3 – 30,000, Q4 – 10,000
    • Selling price per unit: $10
• Production information:
  • Company’s desired level of ending finished goods inventory is 15% of next quarters budgeted unit sales.
  • Q1 beginning inventory would be PY Q4 ending. Which means that when calculating Q4 PY ending you would look at CY Q1 sales units.
  • When calculating Q4 ending you would need to know next years Q1 sales units. It is estimated that Q1 sales units for the following year will be a 10% increase to current year Q1.
• Direct materials information:
  • 12 ounces (oz) of chocolate per unit
  • Chocolate costs $.10 per ounce (oz)
  • Company’s desired level of ending material inventory is 20% of next quarters budgeted direct material needs.
  • Q1 beginning & Q4 ending use the same method as used during the production budget.
• Direct labor information:
  • Fifteen minutes per unit (15 minutes/60 minutes = .25/hr per unit)
  • Employees are paid $8/hour
• Overhead information:
  • Production supervisor salary for the year is $40,000
  • Machinery depreciation for the year using straight line is $13,000
  • Factory supplies is $2.00 per DL hour
  • Maintenance & repairs is $4.00 per DL hour
  • Utilities is $2.50 per DL hour
• Selling, General & Administrative (SG&A) information:
  • Executive salary for the year is $50,000
  • Taxes & insurance for the year is $7,500
  • Delivery expense is $.30 per sold unit
  • Other administrative expenses is $.10 per unit sold
• Cost of Goods Manufactured information:
  • WIP, beginning $180,000 & ending $155,000
• Income Statement
  • Income tax 40% on net income before taxes (NIBT)

The Hammerly Corporation is preparing its master budget for the quarter ending March 31. It sells a single product for $25 a unit. Budgeted sales are 40% cash and 60% on credit. All credit sales are collected in the month following the sales. Budgeted unit sales as provided by Regional Vice Presidents of Sales across the United States for the next four months follow:

Key Facts

	January	February	March	April
Sales in units ……………….	1,200	1,000	1,600	1,400

At December 31, the balance in accounts receivable is $10,000, which represents the uncollected portion of December sales. The company desires merchandise inventory equal to 30% of the next month's sales in units. The December 31 balance of merchandise inventory is 340 units, and inventory cost is $10 per unit. 40% of purchases are paid in the month of purchase and 60% are paid in the following month. At December 31, the balance of Accounts Payable is $8,000, which represents the unpaid portion of December's purchases.

Other Relevant and Important Budget Assumptions:

Operating expenses are paid in the month incurred and consist of:

· Sales commissions (10% of sales)

· Freight (2% of sales)

· Office salaries ($2,400 per month)

· Rent ($4,800 per month)

Legal and Professional Services are $500 per month

Depreciation expense is $4,000 per month. The income tax rate is 40%, and income taxes will be paid on April 15. A minimum cash balance of $10,000 is required by the company’s major bank/lender, and the cash balance at December 31 is $10,200. Loans are obtained at the end of a month in which a cash shortage occurs. Interest is 1% per month, based on the beginning of the month loan balance, and must be paid each month (The interest payment is rounded to the nearest whole dollar). If the ending cash balance exceeds the minimum, the excess will be applied to repaying any outstanding loan balance. At December 31, the loan balance is $0.

Prepare a master budget (round all dollar amounts to the nearest whole dollar) for each of the months of January, February, and March that includes the following major categories of the budget process:

Sales budget, Production Budget, Purchases Budget, Selling, General & Adminstrative Budget (SG&A), Cash Budget, Cash Payments Budget, etc:

· Schedule of cash receipts

· Merchandise purchases budget

· Schedule of cash payments for merchandise purchases

· Schedule of cash payments for selling and administrative expenses (combined)

· Cash budget, including information on the loan balance

· Budgeted income statement for the quarter

a) The US trade balance with Hong Kong?