A relatively new company, Wine To End Whining, Inc , has determined they need to engage in a budgeting process as part of their new strategic plan The Company has asked you to provide the following items for the months of January, February, and March of 2017 A) a Purchases Budget B) a Cash Budget C) a Budgeted Income Statement and D) a Budgeted Balance Sheet They have provided you with the planning document below and also, with their December 31, 2016 Balance Sheet Please complete the four items requested on Worksheet Tabs A, B, C, and D of this Workbook Use the information provided on the December 31, 2016 Balance Sheet shown below to help you create the budgeting documents requested WINE TO END WHINING, INC PLANNING DATA FOR 2017 All Sales are on Credit Collections of Accounts Receivable Month of Service 56 Month following Service 44 Actual December 2016 Sales $ 200,000 Expected Sales in Dollars January $ 220,000 February $ 193,000 March $ 178,000 April $ 201,000 Cost of Goods Sold as a percentage of selling price 60 Planned ending inventory as a percentage of next month's required inventory 65 Purchases are are all on credit Purchases paid in current month 30 Purchases paid in next month 70 Sales commission as a percent of sales 3 Sales commission are paid one month after the month incurred Advertising expenses have a fixed and variable portion Fixed portion $4,200 The fixed portion of the advertising is paid in the current month Variable portion as a percentage of sales 1 The variable portion is paid one month after the month incurred Insurance policy Months of insurance coverage paid for 12 The policy period is from February 1 to January 31 each year The premium to be paid on February 1, 2017 is $18,000 The premium will be charged to prepaid insurance Selling and Administrative expenses have a fixed and variable portion Fixed portion is paid in the month incurred $29,000 Variable portion as a percentage of sales 2 Variable S A expenses are paid one month after the month incurred Depreciation expense per month $5,000 The annual interest rate on the long term debt is 3 5 Interest is incurred on the principal balance outstanding each month Interest is paid on a quarterly basis Interest for December to February will be paid March 1 No principal payments are scheduled to be made on the long term debt until September of 2017 Income Tax rate 30 Accrued taxes are paid on the 15th of January, April, July and October The Company's Board of Directors plans to declare a dividend on January 20 $12,000 It will be paid on February 15 WINE TO END WHINING, INC BALANCE SHEET December 31, 2016 ASSETS Current Assets Cash $ 103,200 Accounts Receivable 88,000 Inventory 85,800 Prepaid Insurance 1,500 Total Current Assets 278,500 Property Plant and Equipment Office Equipment 300,000 Accumulated Depreciation (60,000) Total Property Plant and Equipment 240,000 Total Assets $ 518,500 LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES Current Liabilities Accounts Payable Purchases $ 89,460 Sales Commission Payable 6,000 Selling and Admin Payable 4,000 Advertising Payable 2,000 Interest Payable 467 Dividends Payable Income Taxes Payable 14,970 Total Current Liabilities 116,897 Long Term Debt 160,000 Total Liabilities 276,897 SHAREHOLDERS' EQUITY Common Stock 124,000 Retained Earnings 117,603 Total Shareholders' Equity 241,603 Total Liabilities and Shareholders Equity $ 518,500 Based on the information available to you, complete the Budgeted Balance Sheet worksheet below Solution WINE TO END WHINING, INC BUDGETED BALANCE SHEETS ASSETS Dec 31, 2016 Jan 31, 2017 Feb 28,2017 Mar 31, 2017 Current Assets Cash $ 103,200 Accounts Receivable 88,000 Inventory 85,800 Prepaid Insurance 1,500 Total Current Assets 278,500 Property Plant and Equipment Office Equipment 300,000 Accumulated Depreciation (60,000) Total Property Plant and Equipment 240,000 Total Assets $ 518,500 LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES Current Liabilities Accounts Payable Purchases 89,460 Sales Commission Payable 6,000 Selling and Admin Payable 4,000 Advertising Payable 2,000 Interest Payable 476 Dividends Payable Income Taxes Payable 14,970 Total Current Liabilities 116,897 Long Term Debt 160,000 Total Liabilities 276,897 SHAREHOLDERS' EQUITY Common Stock 124,000 Retained Earnings 117,603 Total Shareholders' Equity 241,603 Total Liabilities and Shareholders Equity $ 518,500

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A relatively new company, Wine To End Whining, Inc., has determined they need to engage in a budgeting process as part of their new strategic

A relatively new company, Wine To End Whining, Inc., has determined they need to engage in a budgeting process as part of their new strategic plan. The Company has asked you to provide the following items for the months of January, February, and March of 2017: A) a Purchases Budget; B) a Cash Budget; C) a Budgeted Income Statement; and D) a Budgeted Balance Sheet. They have provided you with the planning document below and also, with their December 31, 2016 Balance Sheet. Please complete the four items requested on Worksheet Tabs A, B, C, and D of this Workbook.

Use the information provided on the December 31, 2016 Balance Sheet shown below to help you create the budgeting documents requested.

WINE TO END WHINING, INC.
PLANNING DATA FOR 2017

All Sales are on Credit
Collections of Accounts Receivable:
Month of Service	56%
Month following Service	44%

Actual December 2016 Sales	$ 200,000
Expected Sales in Dollars
January	$ 220,000
February	$ 193,000
March	$ 178,000
April	$ 201,000

Cost of Goods Sold as a percentage of selling price.	60%

Planned ending inventory as a percentage of next month's required inventory.	65%

Purchases are are all on credit.
Purchases paid in current month	30%
Purchases paid in next month	70%


Sales commission as a percent of sales	3%
Sales commission are paid one month after the month incurred.

Advertising expenses have a fixed and variable portion:
Fixed portion	$4,200
The fixed portion of the advertising is paid in the current month.
Variable portion as a percentage of sales	1%
The variable portion is paid one month after the month incurred.

Insurance policy:
Months of insurance coverage paid for	12
The policy period is from February 1 to January 31 each year
The premium to be paid on February 1, 2017 is	$18,000
The premium will be charged to prepaid insurance

Selling and Administrative expenses have a fixed and variable portion:
Fixed portion is paid in the month incurred	$29,000
Variable portion as a percentage of sales	2%
Variable S&A expenses are paid one month after the month incurred

Depreciation expense per month	$5,000

The annual interest rate on the long term debt is	3.5%
Interest is incurred on the principal balance outstanding each month.
Interest is paid on a quarterly basis. Interest for December to February will be paid March 1.
No principal payments are scheduled to be made on the long-term debt until September of 2017

Income Tax rate	30%
Accrued taxes are paid on the 15th of January, April, July and October

The Company's Board of Directors plans to declare a dividend on January 20	$12,000
It will be paid on February 15.

WINE TO END WHINING, INC.

BALANCE SHEET

December 31, 2016

ASSETS

Current Assets

Cash

$ 103,200

Accounts Receivable

88,000

Inventory

85,800

Prepaid Insurance

1,500

Total Current Assets

278,500

Property Plant and Equipment

Office Equipment

300,000

Accumulated Depreciation

(60,000)

Total Property Plant and Equipment

240,000

Total Assets

$ 518,500

LIABILITIES AND SHAREHOLDERS EQUITY

LIABILITIES

Current Liabilities

Accounts Payable - Purchases

$ 89,460

Sales Commission Payable

6,000

Selling and Admin Payable

4,000

Advertising Payable

2,000

Interest Payable

467

Dividends Payable

Income Taxes Payable

14,970

Total Current Liabilities

116,897

Long Term Debt

160,000

Total Liabilities

276,897

SHAREHOLDERS' EQUITY

Common Stock

124,000

Retained Earnings

117,603

Total Shareholders' Equity

241,603

Total Liabilities and Shareholders Equity

$ 518,500

Based on the information available to you, complete the Budgeted Balance Sheet worksheet below:

Solution:

WINE TO END WHINING, INC.

BUDGETED BALANCE SHEETS

ASSETS

Dec 31, 2016

Jan 31, 2017

Feb 28,2017

Mar 31, 2017

Current Assets

Cash

$ 103,200

Accounts Receivable

88,000

Inventory

85,800

Prepaid Insurance

1,500

Total Current Assets

278,500

Property Plant and Equipment

Office Equipment

300,000

Accumulated Depreciation

(60,000)

Total Property Plant and Equipment

240,000

Total Assets

$ 518,500

LIABILITIES AND SHAREHOLDERS EQUITY

LIABILITIES

Current Liabilities

Accounts Payable - Purchases

89,460

Sales Commission Payable

6,000

Selling and Admin Payable

4,000

Advertising Payable

2,000

Interest Payable

476

Dividends Payable

Income Taxes Payable

14,970

Total Current Liabilities

116,897

Long Term Debt

160,000

Total Liabilities

276,897

SHAREHOLDERS' EQUITY

Common Stock

124,000

Retained Earnings

117,603

Total Shareholders' Equity

241,603

Total Liabilities and Shareholders Equity

$ 518,500

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