Accounting Principles II
Master Budget Project
Wild Wood Company's management asks you to prepare its master budget using the following information.
The budget is to cover the months of April, May, and June of 2011.
Wild Wood Company
Balance Sheet
March 31, 2011
Assets	Liabilities and Equity
Cash	50,000	Accounts payable	156,000
Accounts receivable	175,000	Short-term notes payable	12,000
Inventory	126,000	Total current liabilities	168,000
Total current assets	351,000	Long-term note payable	200,000
Equipment, gross	480,000	Total liabilities	368,000
Accumulated depreciation	-90,000	Common stock	235,000
Equipment, net	390,000	Retained earnings	138,000
		Total stockholders' equity	373,000
Total assets	741,000	Total liabilities and equity	741,000
Additional Information:
1)	Sales for March total 10,000 units. Each month's sales are expected to exceed the prior month's
results by 5%. The product's selling price is $25 per unit.
2)	Company policy calls for a given month's ending inventory to equal 80% of the next month's
expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy.
The purchase price is $15 per unit.
3)	Sales representatives' commissions are 12.5% of sales and are paid in the month of the sales. The
sales manager's monthly salary will be $3,500 in April and $4,000 per month thereafter.
4)	Monthly general and administrative expenses include $8,000 administrative salaries, $5,000
depreciation, and 0.9% monthly interest on the long-term note payable.
5)	The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables
are collected in full in the month following the sale (none is collected in the month of the sale).
6)	All merchandise purchases are on credit, and no payables arise from any other transactions. One
month's purchases are fully paid in the next month.
7)	The minimum ending cash balance for all months is $50,000. 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.
8)	Dividends of $100,000 are to be declared and paid in May.
9)	No cash payments for income taxes are to be made during the second calendar quarter. Income
taxes will be assessed at 35% in the quarter
10)	Equipment purchases of $55,000 are scheduled for June.
REQUIRED
1)	Prepare sales budget, including budgeted sales for July
2)	Prepare purchases budget, the budgeted cost of goods sold for each month and quarter, and the
cost of the June 30 budgeted inventory
3)	Prepare the operating expense budget
4)	Prepare the budgeted Income Statement
5)	Prepare expected cash receipts from customers and the expected June 30 balance of accounts
receivable
6)	Prepare expected cash payments for purchases and the expected June 30 balance of accounts
payable
7)	Prepare budgeted cash payments for operating expenses
8)	Prepare the cash budget
9)	Prepare the budgeted Balance Sheet
10)	Prepare the budgeted Statement of Cash Flows

Accounting Principles II Master Budget Project Wild Wood Company's management asks you to prepare its master budget using the following information. The budget is to cover the months of April, May, and June of 2011. Wild Wood Company Balance Sheet March 31, 2011 Assets Cash Accounts receivable Inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net 50,000 175,000 126,000 351,000 480,000 (90,000) 390,000 Total assets 741,000 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity 156,000 12,000 168,000 200,000 368,000 235,000 138,000 373,000 741,000 Additional Information: 1) Sales for March total 10,000 units. Each month's sales are expected to exceed the prior month's results by 5%. The product's selling price is $25 per unit. 2) Company policy calls for a given month's ending inventory to equal 80% of the next month's expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit. 3) Sales representatives' commissions are 12.5% of sales and are paid in the month of the sales. The sales manager's monthly salary will be $3,500 in April and $4,000 per month thereafter. 4) Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable. 5) The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale). 6) All merchandise purchases are on credit, and no payables arise from any other transactions. One month's purchases are fully paid in the next month. 7) The minimum ending cash balance for all months is $50,000. 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. 8) Dividends of $100,000 are to be declared and paid in May. 9) No cash payments for income taxes are to be made during the second calendar quarter. Income taxes will be assessed at 35% in the quarter 10) Equipment purchases of $55,000 are scheduled for June. REQUIRED 1) Prepare sales budget, including budgeted sales for July 2) Prepare purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the June 30 budgeted inventory 3) Prepare the operating expense budget 4) Prepare the budgeted Income Statement 5) Prepare expected cash receipts from customers and the expected June 30 balance of accounts receivable 6) Prepare expected cash payments for purchases and the expected June 30 balance of accounts payable 7) Prepare budgeted cash payments for operating expenses 8) Prepare the cash budget 9) Prepare the budgeted Balance Sheet 10) Prepare the budgeted Statement of Cash Flows Problem 22-5B Sales Budget January February March Total January February March Total January February March Total January February March Total January February March Total Budgeted Units Budgeted Unit Sales Price Budgeted Sales in Dollars Total Merchandise Purchases Budget Next Period's unit sales Ratio of inventory to future sales Budgeted ending inventory Add Budgeted sales Required available merchandise Less Beginning Inventory Units to be purchased Budgeted Cost Per Unit Budgeted merchandise purchases Selling Expense Budget Budgeted Sales Sales commission percent Sales Commissions Expense Sales Salaries Total Selling Expenses General and Administrative Expense Budget Salaries Maintenance Depreciation Total Expenses Depreciation Expense Calculations Capital Expenditures Budget January February March Total January February March Total January February March Total Equipment Purchases Land Purchase Total Budgeted Cash Collections from Customers Total Sales Cash Sales Credit Sales Cash Collections Receivables Month after sale Second Month Total from Credit customers Cash Sales Total Cash Received Budgeted Cash Payments for Purchases Credit Purchases Accounts Payable Month after purchase (20%) Second month (80%) Total paid for purchases Cash Budget January Beginning Cash Balance Cash Receipts from Customers Total Cash Available Cash Disbursements: Payments for Purchases Sales Commissions Sales Salaries General & Administrative Salaries Maintenance Expense Interest Taxes Payable Purchase of Equipment Purchase of land Total Cash Disbursements Preliminary Balance Repayment of loan to bank Ending Cash Balance Loan balance, end of month February March Isle Corporation Budgeted Income Statement For the Quarter ended March 31, 2014 Budgeted Balance Sheet Isle Corporation Budgeted Balance Sheet 31-Mar-14 Assets Cash Accounts receivable Inventory Total Current Assets Land Equipment Less accumulated depreciation Total Assets Liabilities and Equity Accounts payable Bank loan payable Taxes payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity Cash budget Note 1 Note 2 Capital budget Note 3 Note 4 Note 5 Cash Budget Income Statement Note 6 Budgeted Statement of Cash Flows Isle Corporation Budgeted Statement of Cash Flows For the Quarter ended March 31, 2013 Problem 22-7B Sales Budget July Aug Sept Oct July Aug Sept Quarter July Aug Sept Quarter Budgeted Units Budgeted Unit Sales Price Budgeted Sales in Dollars Total Production Budget Next Period's budgeted sales Ratio of inventory to future sales Budgeted ending inventory Add Budgeted Sales Required units to be produced Less Beginning Inventory Units to be produced Raw Matarials Budget Production budget (units) Materials requirement per unit Materials needed for production Add budgeted Inventory Total materials requirement (units) Less Beginning Inventory Materials to be purchased Material price per unit Total cost of direct materials purchased Direct Labor Budget July Aug Sept Quarter July Aug Sept Quarter July Aug Sept Total July Aug Sept Total Budgeted production (units) Labor requirements per unit (hours) Total hours needed Labor rate (per hour) Labor dollars Factory Overhead Budget Labor hours needed Variable factory overhead rate Budgeted variable overhead Fixed Overhead Budgeted total overhead Selling Expenses Budgets Budgeted Sales Sales commission percent Sales commission expense Sales Salaries Total Selling Expenses General and Administrative Expenses Salaries Interest on long-term note Total Expenses Cash Receipts from Customers July Aug Sept Total July Aug Sept Quarter July Aug Sept Total Sales Cash Sales (30%) Credit sales (70%) Cash Collections Month after sale (100%) Cash Sales Total Cash Received Budgeted Cash Payments for Purchases Cash Budget Beginning Cash Balance Cash Receipts from Customers Total Cash Available Cash Disbursements: Payments for raw materials Payments for direct labor Payments for variable overhead Sales Commissions Sales Salaries General & Administrative Salaries Dividends Loan Interest Long-Term note interest Equipment Purchases Total Cash Disbursements Preliminary cash balance Additional loan Repayment of loan to bank Ending Cash Balance Loan Balance, end of month Budgeted Income Statement NABAR Manufacturing Budgeted Income Statement For the Quarter ended September 30, 2013 Budgeted Balance Sheet NABAR Manufacturing Budgeted Balance Sheet 30-Sep-13 ASSETS Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total current assets Equipment Less: accumulated depreciation Total Assets LIABILITIES AND EQUITY Accounts Payable Bank Loan Payable Taxes Payable Total current liabilities Long-term note payable Common stock Retained Earnings Total stockholders' equity Total Liabilities and Equity Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Budgeted Statement of Retained Earnings NABAR Manufacturing Budgeted Statement of Retained Earnings For the Quarter Ended September 30, 2013 Retained earnings - Beginning Balance Add: Net Income Less: Dividends Retained earnings - Ending Balance Budgeted Statement of Cash Flows NABAR Manufacturing Budgeted Statement of Cash Flows For the Quarter ended September 30 , 2013 Problem 22-7B Sales Budget July Aug Sept Oct July Aug Sept Quarter July Aug Sept Quarter Budgeted Units Budgeted Unit Sales Price Budgeted Sales in Dollars Total Production Budget Next Period's budgeted sales Ratio of inventory to future sales Budgeted ending inventory Add Budgeted Sales Required units to be produced Less Beginning Inventory Units to be produced Raw Matarials Budget Production budget (units) Materials requirement per unit Materials needed for production Add budgeted Inventory Total materials requirement (units) Less Beginning Inventory Materials to be purchased Material price per unit Total cost of direct materials purchased Direct Labor Budget July Aug Sept Quarter July Aug Sept Quarter July Aug Sept Total July Aug Sept Total Budgeted production (units) Labor requirements per unit (hours) Total hours needed Labor rate (per hour) Labor dollars Factory Overhead Budget Labor hours needed Variable factory overhead rate Budgeted variable overhead Fixed Overhead Budgeted total overhead Selling Expenses Budgets Budgeted Sales Sales commission percent Sales commission expense Sales Salaries Total Selling Expenses General and Administrative Expenses Salaries Interest on long-term note Total Expenses Cash Receipts from Customers July Aug Sept Total July Aug Sept Quarter July Aug Sept Total Sales Cash Sales (30%) Credit sales (70%) Cash Collections Month after sale (100%) Cash Sales Total Cash Received Budgeted Cash Payments for Purchases Cash Budget Beginning Cash Balance Cash Receipts from Customers Total Cash Available Cash Disbursements: Payments for raw materials Payments for direct labor Payments for variable overhead Sales Commissions Sales Salaries General & Administrative Salaries Dividends Loan Interest Long-Term note interest Equipment Purchases Total Cash Disbursements Preliminary cash balance Additional loan Repayment of loan to bank Ending Cash Balance Loan Balance, end of month Budgeted Income Statement NABAR Manufacturing Budgeted Income Statement For the Quarter ended September 30, 2013 Budgeted Balance Sheet NABAR Manufacturing Budgeted Balance Sheet 30-Sep-13 ASSETS Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total current assets Equipment Less: accumulated depreciation Total Assets LIABILITIES AND EQUITY Accounts Payable Bank Loan Payable Taxes Payable Total current liabilities Long-term note payable Common stock Retained Earnings Total stockholders' equity Total Liabilities and Equity Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Budgeted Statement of Retained Earnings NABAR Manufacturing Budgeted Statement of Retained Earnings For the Quarter Ended September 30, 2013 Retained earnings - Beginning Balance Add: Net Income Less: Dividends Retained earnings - Ending Balance Budgeted Statement of Cash Flows NABAR Manufacturing Budgeted Statement of Cash Flows For the Quarter ended September 30 , 2013