GRILTON TIRE COMPANY Balance Sheet December 31, 2021 Assets Current Assets: Cash 39,000 Accounts Receivable 40,000 Raw Materials Inventory 2,400 Finished Goods Inventory 8.700 Total Current Assets $ 90,100 Property, Plant and Equipment: Equipment 177,000 Less: Accumulated Depreciation (42,000) 135,000 Total Assets $225,100 Liabilities Current Liabilities: Accounts Payable $ 8,000 Stockholder's Equity Common Stock, no par 130,000 Retained Earnings 87.100 Total Stockholder's Equity 217.100 Total Liabilities and Stockholder's Equity $225,100 n a. Budgeted Sales are 1,500 for the first quarter and expected to increase by 200 tires per quarter. Cash Sales are expected to be 30% of total sales, with the remaining 70% of sales on account. b. Finished Goods Inventory on December 31, 2021 consists of 300 tires at $29 each. c. Desired ending Finished Goods Inventory is 40% of the next quarter's sales; first quarter sales for 2023 are expected to be 2,300 tires and second quarter sales for 2022 are expected to be 2,500. FIFO inventory costing method is used. d. Direct Materials cost is $8 per tire. e. Desired ending Raw Materials Inventory is 30% of the next quarter's direct materials needed for production. f. Each tire requires 0.40 hours of direct labor, direct labor costs average $16 per hour. g. Variable manufacturing overhead is $2 per tire produced. h. Fixed manufacturing overhead includes $4,500 per quarter in depreciation and $26,780 per quarter for other costs, such as utilities, insurance, and property taxes. i. Fixed selling and administrative expenses include $8,000 per quarter for salaries; $1,800 per quarter for rent; $1,200 per quarter for insurance; and $500 per quarter for depreciation. j. Variable selling and administrative expenses include supplies at 2% of sales. k. Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid in the first quarter. 1. Cash receipts for sales on account are 60% in the quarter of sale and 40% in the quarter following the sale. The December 31, 2021 Accounts Receivable ($40,000) is received in the first quarter of 202.2 m. Direct materials purchases are paid 70% in the quarter purchased and 30% in the following quarter. The December 31, 2021 Accounts Payable ($8,000) is paid in the first quarter of 2022. n. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. o. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. p. Grilton desires to maintain a minimum cash balance of $35,000 and borrows from the local bank as needed in increments of $1,000 at the beginning of the quarter, principal repayments are made at the beginning of the quarter when excess funds are available and in increments of $1,000; interest is 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. Interest must be paid at the beginning of each quarter. 6. Prepare a budgeted Schedule of Cost of Goods Manufactured for the year of 2022. (5 pts.) 7. Prepare a budgeted Income Statement for the year of 2022 (10 pts.) 8. Prepare a cash budget for the year of 2022. (15 pts. 140 141 142 Direct Materials Used: 143 COST OF GOODS MANUFACTURED BUDGET 144 Dir. Mat. Inv. 1/1/2022 145 146 Purchases during 2022 147 148 Materials Available 149 150 Less: Dir. Mat. Inv 12/31/2022 151 152 Cost of Direct Mat. Used 153 154 Direct Labor Costs 155 156 Manufacturing OH costs 157 158 Total Manufacturing costs 159 160 Add: Beg. WIP 1/1/2022 161 162 Subtotal 163 164 Less: End WIP 12/31/2022 165 166 Cost of Goods Manufactured 167 168 169 173 174 175 176 Sales 179 Cost of Goods Sold: 180 182 Fin. Goods Inv. Dec. 31,2021* Cost of Goods Manufactured 184 185 Goods available for sale 187 Less. Fin. Goods Inv. 12/31/2022"* 130 193 195 Cost of Goods Sold Gross Margin Selling and Admin. Expenses 136 Income from Operations 130 Interest Expense 300 Income before Income taxes 201 Income Tax Expense 204 Net Income 200 Cost of Goods Manufactured/ 7 Total units produced Unit cost for units produced in 2022 200 210 211 212 *See Balance Sheet on 12/31/2021 0 E INCOME STATEMENT For the year ended December 31, 2022 D H A 216 217 218 219 Beginning Cash Balance 220 Add Cash Receipts: 221 Collections from customers 222 Total cash available 223 224 Cash Payments: 225 227 Direct Materials (Cash Payments) Direct Labor 228 Manufacturing Overhead 229 Selling and Administrative: 2:30 231 Fixed Variable 232 Capital Expenditures 233 Income Taxes 234 236 Total cash disbursements 236 237 Excess (deficiency) of cash available 230 over disbursements 239 240 241 Cash balance before financing 242 243 Financing Section: 244 Borrowings (at the beginning of quarters) 245 Repayments (at the beginning of quarters) 246 Interest 247 248 Ending Cash balance CASIT DUDOLT D For the year ended December 31, 2022 1 2 3 4 Year