here you go. Please see attached. thanks

7. Federal income taxes are budgeted at 40% of the income before federal income taxes. The taxes should be accrued, and no payments are due in the first quarter

Problem 7-1 Wimerick Corporation prepares annual budgets by quarters. The company's post-closing trial balance as of December 31, 2015, is a Debits Cash $138,000.00 Accounts Revieivable Credits $360,000.00 Allowance for Uncollecvible Accoujts $12,000.00 Inventories $156,000.00 Prepaid Expenses $12,000.00 Furnature and Equipmant $180,000.00 Accumulated Depreciations $12,000.00 Accounts Payable $120,000.00 Accrued Liabli $36,000.00 Notes Payable 5% due 2016 $480,000.00 Cap Stock $300,000.00 Retained Earnings (deficit) $114,000.00 $960,000.00 $960,000.00 All of the capital stock of the company was recently acquired by Juan Jackson. After the purchase, Jackson loaned substantial sums o which still owes him $480,000 on a 5% note. There are no accrued federal income taxes payable, but future earnings will be subjec Jackson is anxious to withdraw $120,000 from the corporation (as a payment on the note payable to him) but will not do so if it redu cash balance below $120,000. Thus, he is quite interested in the budgets for the quarter ending March 31, 2016 1. Sales for the coming quarter ending March 31, 2016, are forecasted at $1,200,000; for the following quarter they are forecasted to yield a gross margin of 40%. Inventory is to be maintained on hand at the end of any quarter in an amount equal to 20% of the g Budget are on account, and 95% of the December 31, 2015, receivables plus 70% of the current quarter's sales will be collected d Q1 END 3/31 Q2 All sales Collected on Q1 Forecasted Sales $1,200,000 $1,500,000 70% of 300K $210,000 COG to be Sold $720,000 $900,000 98% of 360K $342,000 GM $480,000 $600,000 Inventory (20%) $180,000 Budgeted Sales $1,200,000 COGS $720,000 GM $480,000 Desired Inventory (20%) $552,000 $180,000 $300,000 2. Selling expenses are budgeted at $48,000 plus 6% of sales; $24,000 will be incurred on account, $66,000 accrued, $27,000 from insurance, and $3,000 from allocated depreciation. Selling Expenses budgeted at 48,000 + 6% sales 24,000 on account 66,000 accrued 27,000 from expiration 3,000 allocated depreciation Selling expenses $120,000 48000 +(0.06*1,200,000)) On Account $24,000 Accrued $66,000 Expiration Prepaid $27,000 Allocated Depreciation $3,000 $120,000 Same! 3. Purchasing expenses are budgeted at $34,800 plus 5% of purchases for the quarter; $9,000 will be incurred on account, $48,000 Purchases in QTR $744,000 34800+(0.05*744,000) $72,000 On account Accrued Expired Prepaid $9,000 $48,000 $13,800 $1,200 $72,000 Allocated Depreciation 4. Administrative expenses are budgeted at $42,000 plus 2% of sales; $3,000 will be incurred on account, $36,000 accrued, $13,20 Administrative Expenses 42000+(0.02*1200000) On account $66,000 SAME! $3,000 Accrued $36,000 Expected Pre-Payment $13,200 Allocated Depreciation $1,800 Uncollectable (1% of Sales) $12,000 $66,000 SAME! 5. Interest accrues at 5% annually on the notes payable and is credited to Accrued Liabilities Payable. DEBIT Accrued Interest Notes Payable CREDIT $24,000 $24,000 (480000*0.05) 6. All of the beginning balances in Accounts Payable and Accrued Liabilities Payable, plus 80% of the current credits to Accounts Pa current accrued liabilities will be paid during the quarter. An $18,000 insurance premium is to be paid prior to March 31, and a full y Beg Balance Accounts Payable Accrued Liabilities Payable 120000 36000 80% of current account payable All but 30,000 current liability Insurance premium Years Rent 18000 144000 7. Federal income taxes are budgeted at 40% of the income before federal income taxes. The taxes should be accrued, and no pay a. Prepare a planned operating budget for the quarter ending March 31, 2016, including supporting schedules for plann b. Prepare a financial budget for March31,2016 Supporting schedule should be included that (1) analyze accounts credi operating expenses, (2) show planned accounts receivable collections and balance, and (3) show planned cash flows an c. Will Jackson be able to collect the $120,000 on his note as follows: 0 accrued, $13,800 from expired prepaid expenses, and $1,200 from allocated depreciation. 00 from expired prepayments, and $1,800 from allocated depreciation. Uncollectible accounts are estimated at 1% of sales. yments are due in the first quarter ned purchases and operating expenses