Exercise 5-30 (Part Level Submission)

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		$ 50,400
Accounts Receivable (net)		49,140
Finished Goods Inventory		41,160
Raw Materials Inventory		6,350
Property, Plant & Equipment		252,000
Accumulated Depreciation		(63,000	)
Total Assets		$336,050
Accounts Payable		$ 15,120
Income Tax Payable		63,218
Common Stock		84,000
Retained Earnings		173,712
Total Liabilities & Owners Equity		$336,050

		Quarter
Budgeted revenue		$1,184,400
Selling and administrative expense		223,776
Interest expense		2,839
Cash		25,851
Cost of Goods Sold		842,831
Accounts receivable		114,660
Direct materials		4,670
Finished goods		49,573
Acounts payable		27,888
Notes payable		34,440

Additional Information:

		Bates & Hill plans to declare and pay dividends totaling $41,160 in January.
		Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $60,480.
		Bates & Hill plans to purchase equipment in March at a cost of $50,400.
		Depreciation for manufacturing overhead $25,200 per month and for selling and administrative $8,400 per month.

The company expects a 25% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.

(b)

Prepare Bates & Hills pro-forma balance sheet as of March 31.

Pro-forma Balance Sheet

Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the companys sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices.

2.

		Sales Price			1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Acoustic guitar sales		$1,290			400			540			390			660
Electric guitar sales		$2,580			290			110			130			130

Strum Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Claire Strum, the companys sales manager, prepared the following sales forecast for 2015. The forecasted sales prices include a 5 percent increase in the acoustic guitar price and a 10 percent increase in the electric guitar price, to cover anticipated increases in raw materials prices.

		Sales Price			1st Quarter			2nd Quarter			3rd Quarter			4th Quarter
Acoustic guitar sales		$1,290			400			540			390			660
Electric guitar sales		$2,580			290			110			130			130

(a)

Prepare Strums sales budget for 2015.

Sales Budget
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter	Annual
Acoustic:

$	$	$	$	$

$	$	$	$	$
Electric:

$	$	$	$	$

$	$	$	$	$
Total revenue	$	$	$	$	$