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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 expenso Total cash payments Ending cash balance before financing The Grady Tire Company manufactures racing tires for bicycles. Grady sells tires for next year by developing a master budget by quarters. Grady's balance sheet for December 31, (Click the icon to view the balance sheet.) 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 Reference Cash Receipts from Customers principal Total First Second Third Fourth Quarter Quarter Quarter Quarter $ 110,500 $ 123,500 $ 136,500 $ 149,500 $ First Second Third Fourth Quarter Quarter Quarter Quarter 520,000 Total sales Total $ 50.000 33,150 46,410 $ 30.940 37.050 Cash Receipts from Customers: Accounts Receivable balance, December 31, 2018 1st Otr-Cash sales 1st Qtr ---Credit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qt-Credit sales, collection of Otr. 1 sales in Qtr. 2 2nd Or-Cash sales 2nd Qur-Credit sales, collection of tr. 2 sales 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 at - Credit sales, collection of Otr. 3 sales in Otr. 4 4th Otr-Cash sales 51,870 $ 34,580 40,950 57.330 s 38,220 44,850 Print Done Reference $ 50,000 33,150 46,410 $ 30,940 37,050 51,870 Cash Receipts from Customers: Accounts Receivable balance, December 31, 2018 1st Qtr-Cash sales 1st Qtr.-Credit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qt. ---Credit sales, collection of Qtr. 1 sales in Qtr. 2 2nd Qtr-Cash sales 2nd Qtr. --Credit sales, collection of Ctr. 2 sales in Qtr. 2 2nd Qur-Credit sales, collection of tr. 2 sales in Qtr. 3 3rd Qtr -Cash sales 3rd Otr-Credit sales, collection of Ctr. 3 sales in Qtr. 3 3rd QtrCredit salos, collection of Qtr. 3 sales in Qtr. 4 4th Q.-Cash sales 4th Qur-Credit sales, collection of tr. 4 sales in Qtr. 4 Total cash receipts from customers $ 34,580 40,950 57,330 $ 38,220 44,850 62,790 129,560 $ 119,860||$ 132,860 $ 145,860 $ $ 528,140 Accounts Recevable balance, December 31, 2019: 4th Qt--Credit sales, collection of Qtr. 4 sales in Qtr. 1 of 2020 41,860 Cash Payments prine Total Total direct materials purchases First Second Third Fourth Quarter Quarter Quarter Quarter $ 28,500 $ 20,600 $ 22,600 S 13,800 $ First Second Third Fourth Quarter Quarter Quarter Quarter 85,500 Total $ 14.000 14,250 $ 14,250 Cash Payments Direct Materials: Accounts Payable balance, December 31, 2018 1st Qt-Otr. 1 direct material purchases paid in Qtr. 1 1st Qu.-Qtr. 1 direct material purchases paid in Qtr. 2 2nd Quotr. 2 direct material purchases paid in Qtr. 2 2nd Qur-tr. 2 direct material purchases paid in Qtr. 3 3rd Otr ---Otr. 3 direct material purchases paid in Qtr. 3 3rd Ctr. Qtr. 3 direct material purchasen paid in Qur. 4 4th Otr-Qtr. 4 direct material purchases paid in otr. 4 Total payments for direct materials 10,300 $ 10,300 11,300 $ 11,300 6.900 18,200 $ 28,250 24,550 21,600 92,600 - Reference Direct Labor: Total payments for direct labor 8,280 7,840 8,640 9,440 34,200 principal 2,070 1,960 2,160 2,360 8,550 Manufacturing Overhead: Variable manufacturing overhead Utilities, insurance, property taxes Total payments for manufacturing overhead 5,550 5,550 5,550 5,550 7,510 22,200 30,750 7,620 7,710 7,910 9,500 9,500 9,500 2,400 1,950 9.500 2,400 38,000 9,600 Selling and Administrative Expenses: Salarios Expense Rent Expense Insurance Expense Supplies Expense Total payments for Selling and Admin, expenses 2.400 2,400 1.950 1,950 1,950 2,210 2,470 2,990 2,730 16,580 7,800 10,400 65,800 16,060 16,320 16,840 Income Taxes: Total payments for income taxes 4,000 4,000 4,000 4,000 16,000 ser Print Dono 9,500 9,500 2,400 Selling and Administrative Expenses: Salaries Expense Rent Expense Insurance Expense Supplies Expense Total payments for Selling and Admin, expenses 9,500 2,400 1,950 2,470 1,950 2,400 1,950 2,730 9,500 2,400 1,950 2,990 16,840 38,000 9,600 7,800 10,400 65,800 2,210 16,060 16,320 16,580 Income Taxes: Total payments for income taxes 4,000 4,000 4,000 4,000 16,000 Capital Expenditures: Total payments for capital expenditures 45,000 45,000 Total cash payments (before interest) 109,210 $ 60,220 $ 58,530$ 56,390$ 284,350 Accounts Payable balance, December 31, 2019: Ath Ott - Otr. 4 direct material purchases paid in Qtr. 1 of 2020 6.900 Print Done he Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given care stated as of December 31, 2018.) Budgeted sales are 1,700 tires for the first quarter and expected to increase by 200 tires per quarter. Cash a. sales are expected to be 30% of total sales, with the remaining 70% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 200 tires at $30 each. Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are c. expected be 2,500 tires. FIFO inventory costing method is used. Raw Materials Inventory on December 31, 2018, consists of 400 pounds of rubber compound used to d. manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is e. $5.00 per pound Desired ending Raw Materials Inventory is 50% of the next quarter's direct materials needed for production, desired ending inventory for December 31, 2019 is 400 pounds; indirect materials are f. insignificant and not considered for budgeting purposes. g. Each tire requires 0.20 hours of direct labor, direct labor costs average $20 per hour. h. Variable manufacturing overhead is $1 per tire. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $5,550 per quarter for other I costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $9,500 per quarter for salaries; $2,400 per quarter for 1 rent: $1,950 per quarter for insurance; and $500 per quarter for depreciation. K. Variable selling and administrative expenses include supplies at 2% of sales. Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid in the I first quarter. 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 d Done Print Heficien Direct materais requirements are z pounas or a rubber compouna per ure. The cost or the compound is e. $5.00 per pound Desired ending Raw Materials Inventory is 50% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 400 pounds; indirect materials are f. insignificant and not considered for budgeting purposes. 9. Each tire requires 0.20 hours of direct labor, direct labor costs average $20 per hour. h. Variable manufacturing overhead is $1 per tire. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $5,550 per quarter for other I costs, such as utilities, insurance, and property taxes, Fixed selling and administrative expenses include $9,500 per quarter for salaries: $2,400 per quarter for 1. rent; $1,950 per quarter for insurance; and $500 per quarter for depreciation. k Variable selling and administrative expenses include supplies at 2% of sales, Capital expenditures include $45,000 for new manufacturing equipment, to be purchased and paid in the Lfirst quarter. Cash receipts for salos 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 m. accounts are considered insignificant and not considered for budgeting purposes. Direct materials purchases are paid 50% in the quarter purchased and 50% in the following quarter; n. 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 $4,000 per quarter and is paid in the quarter incurred. Grady 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 5% per year and paid 4. at the beginning of the quarter based on the amount outstanding from the previous quarter. Slick cl i Data Table Grady selle alance shed for any zero Grady Tire Company Balance Sheet December 31, 2018 Assets 74,000 Tire Company sh Budget ded Decembe ost arter Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 50,000 2,000 6,000 132,000 150,000 (77,000) Less: Accumulated Depreciation 73,000 Total Assets 205,000 Liabilities Current Liabilities: Accounts Payable 14,000 Stockholders' Equity eck Answer Print Done Data Table Cash $ 74,000 Accounts Receivable Raw Materials Inventory 50,000 2,000 6,000 $ 132,000 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 150,000 (77,000) Less: Accumulated Depreciation 73,000 $ Total Assets 205,000 Liabilities $ 14,000 Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $ Retained Earnings Total Stockholders' Equity 160,000 31,000 191,000 Total Liabilities and Stockholders' Equity $ 205,000 Print Done