Assets show the following information (all amounts in dollars): Cash, 40,000. Accounts receivable, 342,248. Raw materials inventory, 98,500. Finished goods inventory, 325,540. Total current assets, 806,288. Equipment, gross, 600,000. Accumulated depreciation, (150,000). Equipment, net, 450,000. Total assets, 1,256,288. Liabilities and Equity show the following information (all amounts in dollars): Accounts payable, 200,500. Short-term notes payable, 12,000. Total current liabilities, 212,500. Long-term note payable, 500,000. Total liabilities, 712,500. Common stock, 335,000. Retained earnings, 208,788. Total stockholders' equity, 543,788. Total liabilities and equity, 1,256,288. To prepare a master budget for April, May, and June of 2013, management gathers the following information: Sales for March total 20,500 units. Forecasted sales in units are as follows: April, 20,500; May, 19,500; June, 20,000; July, 20,500. Sales of 240,000 units are forecasted for the entire year. The product's selling price is $23.85 per unit and its total product cost is $19.85 per unit. 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 4,925 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,000 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials. 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 16,400 units, which complies with the policy. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $2.70 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead. Sales representatives' commissions are 8% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,000 per month. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable. 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). 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. The minimum ending cash balance for all months is $40,000. 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. Dividends of $10,000 are to be declared and paid in May. No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 35% in the quarter and paid in the third calendar quarter. Equipment purchases of $130,000 are budgeted for the last day of June. 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, except as otherwise noted below. Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.: Sales budget. Production budget. Raw materials budget. Direct labor budget. Factory overhead budget. Selling expense budget. General and administrative expense budget. Cash budget. Budgeted income statement for the entire first quarter (not for each month separately). Budgeted statement of retained earnings. Budgeted balance sheet as of the end of the second calendar quarter. Problem 22-7A
Sales Budget
	April	May	June	July
Budgeted Units
Budgeted Unit Sales Price
Budgeted Sales in Dollars
Total
Production Budget
	April	May	June	Quarter
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
	April	May	June	Quarter
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
	April	May	June	Quarter
Budgeted production (units)
Labor requirements per unit (hours)
Total hours needed
Labor rate (per hour)
Labor dollars
Factory Overhead Budget
	April	May	June	Quarter
Labor hours needed
Variable factory overhead rate
Budgeted variable overhead
Fixed Overhead
Budgeted total overhead
Selling Expenses Budgets
	April	May	June	Total
Budgeted Sales
Sales commission percent
Sales commission expense
Sales Salaries
Total Selling Expenses
General and Administrative Expenses
	April	May	June	Total
Salaries
Interest on long-term note
Total Expenses
Cash Receipts from Customers
	April	May	June	Total
Total Sales
Cash Sales (30%)
Credit sales (70%)
Cash Collections
Month after sale (100%)
Cash Sales
Total Cash Received
Budgeted Cash Payments for Purchases
	April	May	June	Quarter
Cash Budget
	April	May	June
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
Zigby Manufacturing
Budgeted Income Statement
For the Quarter ended June 30, 2013
Budgeted Balance Sheet
Zigby Manufacturing
Budgeted Balance Sheet
30-Jun-13
ASSETS
Cash
Accounts Receivable			Note 1
Raw Materials Inventory			Note 2
Finished Goods Inventory			Note 3
Total current assets
Equipment			Note 4
Less: accumulated depreciation			Note 5
Total Assets
LIABILITIES AND EQUITY
Accounts Payable			Note 6
Bank Loan Payable
Taxes Payable
Total current liabilities
Long-term note payable
Common stock
Retained Earnings
Total stockholders' equity
Total Liabilities and Equity
Budgeted Statement of Retained Earnings
Zigby Manufacturing
Budgeted Statement of Retained Earnings
For the Quarter Ended June 30, 2013
Retained earnings - Beginning Balance
Add: Net Income
Less: Dividends
Retained earnings - Ending Balance
Budgeted Statement of Cash Flows
Zigby Manufacturing
Budgeted Statement of Cash Flows
For the Quarter ended June 30, 2013