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X P22-41A (similar to) The Gessing Tire Company manufactures racing tires for bicycles. Gessing sells tires for $85 each. Gessing is planning for the next year by developing a master budget by quarters, Gessing's balance sheet for December 31, 2018, follows: (Click the icon to view the balance sheet.) Other data for Gossing Tire Company Click the icon to view the other data) Read the requirements Requirement 1. Prepare Gessing's operating budget and cash budget for 2019 by quarter Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, seling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar Begin by preparing the sales budget. Gessing Tire Company Sales Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Budgeted tires to be sold Sales price per unit Total sales Enter any number in the edit fields and then click Check Answer. Check Answer 18 Pemaining L loping a 13,600 111,800 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation productior edule of c g budget et, cost of based on 177,000 (39,000) 138,000 249,800 ssing Tire Sales B ar Ended Seco Quart 5,000 Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par 110,000 134,800 Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 244,800 249,800 then click Print Done Question tv wepa * More Info (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 1,600 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 400 tires at $34 each. C. Desired ending Finished Goods Inventory is 20% of the next quarter's sales; first quarter sales for 2020 are expected be 2,000 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 800 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $6.50 per pound. f. Desired ending Raw Materials Inventory is 30% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 800 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.80 hours of direct labor, direct labor costs average $16 per hour. h. Variable manufacturing overhead is $1 per tire. i. Fixed manufacturing overhead includes $3,500 per quarter in depreciation and $47,950 per quarter for other costs, such as utilities, insurance, and property taxes, Fixed selling and administrative expenses include $8,500 per quarter for salaries: $4,200 per quarter for rent; $1,200 per quarter for insurance; and $1,500 per quarter for depreciation. irst arte s and Print Done 1 More Into acture ar by ws: ince s opel lead alloc jet. Vai manuatury uvema per una i. Fixed manufacturing overhead includes $3,500 per quarter in depreciation and $47,950 per quarter for other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $8.500 per quarter for salaries: $4,200 per quarter for rent; $1,200 per quarter for insurance; and $1,500 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales. Capital expenditures include $40,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 60% in the quarter of the sale and 40% in the quarter following the sale; December 31, 2018, Accounts Receivable is received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 90% in the quarter purchased and 10% in the following quarter, December 31, 2018, Accounts Payable is paid in the first quarter of 2019. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred. q. Gessing desires to maintain a minimum cash balance of $70,000 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 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. or the First Quarto elds and Print Done Review the sales budget you prepared above. Giseppe Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Fourth Quarter Quarter Plus: Total tires needed Less: Budgeted tires to be produced Choose from any list or enter any number in the input fields and then click Chech 17 parts 11 remaining Clear All Prepare the direct materials budget. Review the production budget you prepared above. Giseppe Tire Company Direct Materials Budget For the Year Ended December 31, 2019 Second Third Fourth 25 O uarter Quarter Quarter Total Direct materials per tire Direct materials needed for production Plus: Total direct materials needed Less: Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials Choose from any list or enter any number in the input fields and then click Check Answer 16 parts 10 remaining Clear All ODO Review the production budget you prepared above. Giseppe Tire Company Direct Labor Budget or the Year Ended December 31, 2019 Second Third Quarter m Quarter Quarter 70 Total Direct labor hours needed for production Budgeted direct labor cost Choose from any list or enter any number in the input fields and then click Check Answer. 15 parts 1 remaining Clear All esc Giseppe Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 Second Third Fourth Quarter Quarter Total o Ol11 II VOH cost per tire Budgeted VOH Budgeted FOH Depreciation Utilities, insurance, property taxes Total budgeted FOH Budgeted manufacturing overhead costs Direct labor hours Budgeted manufacturing overhead costs Predetermined overhead allocation rate Choose from any list or enter any number in the input fields and then click Check Answer. 14 parts 14 remaining Clear All esc Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per tire for 2019. (Round all amounts to the nearest cont.) Total projected manufacturing cost per tire for 2019 Choose from any list or enter any number in the input fields and then click Check Answer 13 parts Clear All Review the sales budget you prepared above. Review the production budget you prepared above. Giseppe Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Tires produced and sold in 2019 Total budgeted cost of goods sold Choose from any list or enter any number in the input fields and then click Check Answer. Clear All 12 parts 12 remaining Giseppe Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Fourth Quarter Total Total budgeted selling and administrative expense Choose from any list or enter any number in the input fields and then click Check Answer 1 parts remaining Clear All Cash Receipts from Customers First Quarter Second Quarter Third Quarter Fourth Quarter Total Total sales First Quarter Third Quarter Fourth Quarter Total P8 IS 2 SI Cash Receipts from Customers: Accounts Receivable balance, December 31, 2018 1st Qtr.-Cash sales 1st QtrCredit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qur-Credit sales, collection of Qtr. 1 sales in Qtr. 2 2nd Qtr.-Cash sales 2nd Qtr-Credit sales, collection of Qtr. 2 salos in Qtr. 2 2nd Qtr. Credit sales, collection of Qtr. 2 sales in Qtr. 3 3rd Qtr.-Cash sales 3rd Qtr-Credit sales, collection of Otr. 3 sales in Otr. 3 3rd QtrCredit sales, collection of Qtr. 3 sales in Qtr. 4 Enter any number in the edit fields and then click Check Answer Clear All 10 parts I remaining First Quarter Second Quarter Third Quarter Fourth Quarter Total Total direct materials purchases First Second Quarter Third Quarter Fourth Quarter Total Cash Payments Direct Materials: Accounts Payable balance, December 31, 2018 1st Qtr.-- Qtr. 1 direct material purchases paid in Qtr. 1st Qur-Qtr. 1 direct material purchases paid 2nd Qtr-Qtr. 2 direct material purchases paid in Qtr. 2 2nd Qtr.-- Qtr. 2 direct material purchases paid in Qtr. 3 3rd Qtr-tr. 3 direct material purchases paid in Qtr. 3 3rd Qtr.-- Qtr. 3 direct material purchases paid in Qtr. 4th Qtr-tr. 4 direct material purchases paid in Qtr. Total payments for direct materials LU Enter any number in the edit fields and then click Check Answer. 9 parts Clear All remaining 1st Qtr.-Qtr. 1 direct mana pulu 1st Qur-Qtr. 1 direct material purchases paid in Qtr. 2 2nd Qtr.-Qtr. 2 direct material purchases paid in Qtr. 2 2nd Qtr-tr. 2 direct material purchases paid in Qtr. 3 3rd Qur-Qur. 3 direct material purchases paid in Qtr. 3 3rd Qtr.-Qtr. 3 direct material purchases paid in Qtr. 4 4th Qtr.-Qtr. 4 direct material purchases paid in Qtr. 4 Total payments for direct materials Direct Labor: Total payments for direct labor Enter any number in the edit fields and then click Check Answer. Clear All O parts remaining Manufacturing Overhead: EN Total payments for manufacturing overhead Selling and Administrative Expenses: Total payments for Selling and Admin. expenses Choose from any list or enter any number in the input fields and then click Check Answer. 8 parts O remaining Clear All Income Taxes: Total payments for income taxes Capital Expenditures: Total payments for capital expenditures Total cash payments (before interest) Accounts Payable balance, December 31, 2019: 4th Qtr-tr. 4 direct material purchases paid in Qtr. 1 of 2020 Enter any number in the edit fields and then click Check Ans 7 parts remaining Clear All (CNICRU CITU View de wa JICUL) Cash Budget For the Year Ended December 31, 2019 First Quarter Beginning cash balance Cash receipts Cash available Cash payments: Capital expenditures Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Income taxes Interest expense Total cash payments Ending cash balance before financing Minimum cash balance desired Enter any number in the edit fields and then click Check Answer parts O remaining Cash payments Capital expenditures Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Income taxes Interest expense Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (de ciency) Financing Borrowing Principal repayments Total effects of financing Ending cash balance Enter any number in the edit fields and then click Check Answer parts Cle O remaining (Click the ILTU VIEW W DU ador For the Year Ended December 31, 2019 First Second Third Quarter Quarter | Quarter 55,000 $ 72,830 $ 116,713 $ 1 89,840 101,840 162,670 218,553 E SI Fourth Quarter 170,979 113,840 284,819 $ Beginning cash balance Total 55,000 396,120 451,120 Cash receipts Cash available Cash payments: Capital expenditures Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Income taxes geos 20,000 25,916 GDCD 2 OOO 18,263 3,304 3,370 18,520 2,500 2,884 3,070 18,400 2,500 20,000 78,332 14,056 14,080 74,320 10,000 0 15,113 4,144 3,970 18,760 2,500 18,640 2,500 lo Interest expense 72,770 45,957 47,574 44,487 Total cash payments Ending cash balance before financing Minimum cash balance desired Printer nach evrees de rienry 72,830 (50,000) 116,713 (50,000) 66.713 | 170,979 (50,000) 120.979 240,332 (50,000) 190.332 210.788 240,332 (50,000) 190.332 22.830 | Enter any number in the edit fields and then click Check Answer. part Clear All remaining ONCI (Click the icon to view the balance sheet.) Selling and administrative expenses Income taxes 640 2,500 2 Read the 74,320 10,000 18,760 2,500 Bols > O 0 Interest expense Total cash payments Ending cash balance before financing Minimum cash balance desired Projected cash excess (de ciency) Financing: Borrowing Principal repayments Total effects of financing 72,770 45,957 116,713 (50,000) 22,83096,713) 47,574 170,979 (50,000) 120,970 44,487 240,332 (50,000) 190.332 210,788 240,332 (50,000) 100,332 (50,000) Ending cash balance 72.830 S 118,713 170979S_ 240,32)_240,382) Requirement 2. Prepare Giseppe's annual financial budget for 2019, including budgeted income statement, budgeted balance sheet, an Begin with the budgeted income statement. (Complete all input boxes. Enter a "0" for any zero balances.) Review the sales budget you prepared above. Review the cost of goods sold budget you prepared above. Review the selling and administrative expense budget you prepared above. Begin with the budgeted income statement. (Complete all input boxes. Enter a "0" for any zero balances.) Review the sales budget you prepared above. Review the cost of goods sold budget you prepared above. Review the selling and administrative expense budget you prepared above. Review the cash budget you prepared above. Giseppe Tire Company Budgeted Income Statement For the Year Ended December 31, 2019 Sales Revenue Cost of Goods Sold Gross Profit Selling and Administrative Expenses Operating Income Interest Expense Income before Income Taxes Income Tax Expense UM Net Income Enter any number in the edit fields and then click Check Answer. part remaining Clear All esc Giseppe Tire Company Budgeted Balance Sheet December 31, 2019 Assets Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment Less: Accumulated Depreciation | Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Enter any number in the edit fields and then click Check Answer. All parts showing (Click ICU U VII Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Lab abilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Enter any number in the edit fields and then click Check Answer. Clea All parts showing 0 Data Table Gessing Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash $ Accounts Receivable 71,000 22,000 5,200 13,600 Raw Materials Inventory 111,800 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 177,000 (39,000) 138,000 Less: Accumulated Depreciation 249,800 Total Assets Print Done