Question
Bill Thomas, Bates & Hills controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial
Bill Thomas, Bates & Hills controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The companys balance sheet of December 31 is as follows:
Cash $ 33,000 Accounts Receivable (net) 32,175 Finished Goods Inventory 26,950 Raw Materials Inventory 4,158 Property, Plant & Equipment 165,000 Accumulated Depreciation (41,250 ) Total Assets $220,033 Accounts Payable $ 9,900 Income Tax Payable 41,393 Common Stock 55,000 Retained Earnings 113,740 Total Liabilities & Owners Equity $220,033 Quarter Budgeted revenue $775,500 Selling and administrative expense 146,520 Interest expense 1,859 Cash 16,926 Cost of Goods Sold 551,854 Accounts receivable 75,075 Direct materials 3,058 Finished goods 32,458 Acounts payable 18,260 Notes payable 22,550
Additional Information: Bates & Hill plans to declare and pay dividends totaling $26,950 in January. Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $39,600. Bates & Hill plans to purchase equipment in March at a cost of $33,000. Depreciation for manufacturing overhead $16,500 per month and for selling and administrative $5,500 per month. The company expects a 17% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.
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