Comprehensive budgeting The balance sheet of Watson Company as of December 31, 20X1, follows:

WATSON COMPANY Balance Sheet December 31, 20X1
Assets
Cash		$ 4,595
Accounts receivable		10,000
Finished goods (575 units $7.00)		4,025
Direct materials (2,760 units $0.50)		1,380
Plant & equipment	$50,000
Less: Accumulated depreciation	10,000	40,000
Total assets		$ 60,000
Liabilities & Stockholders' Equity
Accounts payable to suppliers		$ 14,000
Common stock	$25,000
Retained earnings	21,000	46,000
Total liabilities & Stockholders' equity		$ 60,000

The following information has been extracted from the firm's accounting records:

1) All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first 5 months of 20X2 are as follows: January, 1700 units; February, 1800 units; March, 2000 units; April, 2,100 units; and May, 2,100 units.

2) Management wants to maintain the finished goods inventory at 30% of the following month's sales.

3) Watson uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next 6 months. Management wants to maintain the ending direct materials inventory at 60% of the following month's production needs.

4) Seventy percent of all purchases are paid in the month of purchase; the remaining 30% are paid in the subsequent month.

5) Watson's product requires 30 minutes of direct labor time. Each hour of direct labor costs $7.

Instructions

Rounding computations to the nearest dollar, prepare the following for January through March:

1) Sales budget

2) Schedule of cash collections

3) Production budget

4) Direct material purchases budget

5) Schedule of cash disbursements for material purchases

6) Direct labor budget

Determine the balances in the following accounts as of March 31:

1) Accounts Receivable

2) Direct Materials

3) Accounts Payable

Please complete the answers in the follow excel sheet format. I must be able to enter them in a preformated excel spreadsheet.

The below video can also be accessed using this link to see how to do the problem: http://ashford.mediaspace.kaltura.com/media/ACC206A+Chapter+6+Problem+3/0_cajxb3ml

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