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Direct Equipment Projected Revenues & Expenses June July August September October November Sales 85,000 86,275 87,569 88,883 90,216 91,569 Cost of Goods Sold 52,700 53,491
Direct Equipment | ||||||
Projected Revenues & Expenses | ||||||
June | July | August | September | October | November | |
Sales | 85,000 | 86,275 | 87,569 | 88,883 | 90,216 | 91,569 |
Cost of Goods Sold | 52,700 | 53,491 | 54,293 | 55,107 | 55,934 | 56,773 |
Gross Profit | 32,300 | 32,785 | 33,276 | 33,775 | 34,282 | 34,796 |
Admin & Selling Costs | 21,000 | 21,000 | 21,000 | 21,000 | 21,000 | 21,000 |
Net Income before Taxes | 11,300 | 11,785 | 12,276 | 12,775 | 13,282 | 13,796 |
Information related to cash receipts | ||||||
1) Cash sales are 80% and credit sales are 20% per month | ||||||
2) Collections on credit sales are 60% in the month of sale and 40% in the following month | ||||||
Information related to purchases of direct materials | ||||||
1) Purchases of Direct Materials are 32% of Sales | ||||||
2) Direct material purchases are paid 50% in current month and 50% in following month | ||||||
3) Ending Inventory needs to be 30% of the following month's Direct Materials Cost of Goods Sold | ||||||
4) Accounts payable for purchases of direct materials June 30 was $13,600 | ||||||
Information related to cash | ||||||
1) Beginning Cash Balance June 30 was $175,000 | ||||||
2) Admin & Selling Costs include $1,000 depreciation expense | ||||||
3) Admin & Sales salaries are $4,350 per month (included in total Admin and Selling Costs) | ||||||
4) Direct wages are 30% of sales | ||||||
5) Wages are paid 80% in current month and 20% the following month | ||||||
6) A dividend to the owners of 10% of the ending quarter's Net Income (after tax) is paid in Jan, Apr, Jul, Oct | ||||||
7) April - June Net Income before taxes was $50,000 | ||||||
8) Quarterly estimated taxes are paid the month following the end of the quarter | ||||||
9) Effective tax rate is 23%. | ||||||
10) Direct Equipment operates on a calendar year basis | ||||||
Required - Prepare the following budgets for July - October | ||||||
1) Cash Receipts | ||||||
2) Production (direct material) | ||||||
3) Cash disbursements for purchases of Direct Materials (use results of Production budget) | ||||||
4) Cash | ||||||
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