Please help me out with the 8 requirements:
1. Monthly Sales Budget
2. Monthly Production Budget
3. Monthly Direct Materials Budget
4. Monthly Schedule of Expected Cash Collection from Customers
5. Monthly Schedule of Expected Cash Payments for Direct Materials
6. Monthly Cash Budget
7. Monthly and Quarterly Budgeted Income Statements
8. Quarterly Budgeted Balance Sheet
Requirements: Mr. Smith is preparing for a meeting with his banker to arrange the financing for the first quarter. Based on his sales forecast and the information he has provided (as detailed in the Situation below), your job as his new financial analyst is to prepare the following reports for the First Quarter of 2019: 1. Monthly Sales Budget 2. Monthly Production Budget 3. Monthly Direct Materials Budget 4. Monthly Schedule of Expected Cash Collection from Customers 5. Monthly Schedule of Expected Cash Payments for Direct Materials 6. Monthly Cash Budget 7. Monthly and Quarterly Budgeted Income Statements 8. Quarterly Budgeted Balance Sheet Situation: Iona Corporation makes standard-size 2-inch fasteners, which it sells for $155 per thousand. Mr. Smith is the majority owner and manages the inventory and finances of the company. He estimates sales for the following months in year 2019 to be: January.._. $263,500 (1,700,000 fasteners) February March $217,000 (1,400,000 fasteners) Apri...$310,000 (2,000,000 fasteners) May .$387,500 (2,500,000 fasteners) $186,000 (1,200,000 fasteners) In 2018, Ilona Corporation's budgeted sales were $175,000 in November and $232,500 in December (1,500,000 fasteners) Past history shows that Iona Corporation collects 50 percent of its accounts receivable in the normal 30-day credit period (the month after the sale) and the other 50 percent in 60 days (two months after the sale). It pays for its materials 30 days after receipt. In general, Mr. Smith likes to keep a two-month supply of inventory in anticipation of sales. Inventory at the beginning of December was 2,600,000 units. (This was not equal to his desired two-month supply.) The major cost of production is the purchase of raw materials in the form of steel rods, which are cut, threaded, and finished. Last year raw material costs were $52 per 1,000 fasteners, but Mr. Smith has just been notified that material costs have cisen, effective January 1, to $60 per 1,000 fasteners. The Iona Corporation uses FIF0 inventory accounting. Labor costs are relatively constant at $20 per thousand fasteners, since workers are paid on a piecework basis. Overhead is allocated at $10 per thousand units, and selling and administrative expense is 20 percent of sales. Labor expense and overhead are direct cash outflows paid in the month incurred, while interest and taxes are paid quarterly The corporation usually maintains a minimum cash balance of $25,000, and it puts its excess cash into marketable securities. The average tax rate is 40 percent, and Mr. Smith usually pays out 50 percent of net income in dividends to stockholders. Marketable securities are sold before funds are borrowed when a cash shortage is faced. Ignore the interest on any short-term borrowings. Interest on the long-term debt is paid in March, as are taxes and dividends As ofyear-end, the Iona Corporation's budgeted balance sheet was as follows: IONA CORPORATION Hudprted Balance Sbeet December 31, 2018 Ancts Cash Accounts recenabk Inventory $ 30,000 20,000 237.800 587,800 Total current assets Fised assets: 1,000,000 200,000 Less Accumalated depreciation $1387,800 Liabilities and Stockhelders Equity Accoures payae Long-lerm debl, 8 perce 93,60 400,000 504,200 Commen stock Retained eamings 94 5700 Total labilities and stockhoklers equity 138780 IONA CORPORATION Budgeted Balance Sheet December 31, 2018 Assets Current assets: $ 30,000 320,000 237.800 $ 587,800 Fixed assets: 1,000,000 200,000 800,000 $1387,800 Liabilities and Stockholders' Equity Accounts payable... S 93,600 400,000 $ 504,200 390,000 894,200 $1,387,800
