Please help with Part IV preparing a balance sheet Below are Part I III for reference Part II was answered by Sonali PART I Premier Ties is a division of Menswear, International The division has an exclusive franchise to act as the nationwide distributor of a designers silk ties Sales of this product have grown so rapidly over the past few years that the division vice president has decided to implement quarterly budgeting and planning procedures, starting April 1the beginning of the second quarter in the companys fiscal year The following data has been assembled for the division Recent and forecasted sales in units are as follows January (actual) 20,000 February (actual) 24,000 March (actual) 28,000 April 35,000 May 45,000 June 60,000 July 40,000 August 36,000 September 32,000 The increase in sales before and during June reflects the increased activity surrounding Fathers Day Premier prices this product at 70 over cost All sales are on credit, net 15 days Historically, 25 of sales have been collected in the month of sale, 50 in the following month, and the remaining 25 in the second month following the sale Uncollectible accounts have been insignificant Accounts receivable at the beginning of the second quarter is $229,500 The division tries to maintain an inventory equal to 90 of the next months sales in units The ties cost the company $5 each Premier pays for 50 of its purchases in the month of purchase and the remaining 50 in the month after purchase Accounts payable for purchases at the beginning of the second quarter is $85,750 Premier pays all other cash operating costs in the month in which they are incurred The division pays quarterly salaries of $66,000 plus a $0 50 commission per unit sold Other quarterly operating expenses consist of utilities, $42,000 insurance, $7,200 depreciation, $45,000 miscellaneous, $9,000 1 Prepare a sales budget in units and dollars by month and for the quarter 2 Prepare a schedule of cash collections from sales by month and for the quarter 3 Prepare a purchases budget in units and dollars by month and for the quarter 4 Prepare a schedule of cash payments for purchases by month and for the quarter 5 Prepare a selling and administrative expense budget in dollars by month and for the quarter List each expense separatelyyou may assume that quarterly fixed expenses are incurred uniformly during the quarter A NSWER TO PART 1 PART II Premier plans to purchase land for $25,000 cash in June The company also declares dividends of $12,000 per quarter The dividend is declared in the last month of the quarter and paid in the first month of the following quarter At the end of each quarter, Premier makes a tax payment equal to 20 of budgeted income before tax For purposes of this project, you may assume that the payment is debited to income tax expense At the beginning of the year, Premier borrowed $150,000 on a five year 12 note payable with interest to be paid annually at December 31 The divisions balance sheet at March 31 is as follows PREMIER TIES BALANCE SHEET At March 31 ASSETS Cash $ 44,000 Accounts receivable 229,500 Inventory 157,500 Prepaid insurance 14,400 Property, plant and equipment, net 322,700 Total Assets $768,100 LIABILITIES AND STOCKHOLDERS EQUITY Accounts payable $ 85,750 Dividends payable 12,000 Interest payable 4,500 Note payable 150,000 Common stock, no par 300,000 Retained earnings 215,850 Total Liabilities and Stockholders Equity $768,100 REQUIREMENTS PART 2 Prepare a budgeted income statement for the quarter only using the contribution format List each cost separately At the bottom of your worksheet, answer the questions below Use operating income (income before interest and taxes) in your calculations Round your answers to the nearest whole unit, dollar or one percent as necessary Be sure to label your answers What is the division contribution margin ratio What is the quarterly budgeted break even point in units What is the margin of safety in units for the quarter What is operating leverage for the quarter If the division wants to earn income before interest and taxes of $350,000 for the quarter, how many units must it sell ANSWER to Part II Requirement 2 a Contribution margin ratio Contribution margin Sales $420000 $1190000 35 29 35 b Budgeted break even point in units Total fixed costs Contribution per unit $169200 $3 56400 units Contribution per unit $420000 140000 units $3 c Margin of safety in units Actual sales Break even sales 140000 56400 83600 units d Operating leverage Contribution margin Net operating income $420000 $250800 1 67 167 e Number of units to sell for target operating income (Total fixed costs Target operating income) Contribution per unit ($169200 $350000) $3 173066 67 173067 units PART III Prepare a cash budget by month and for the quarter, listing each category of payment separately (HINT Ending cash balance at April 30 should be $24,125 ) PART 4 The balance sheet information provided in the project data has been entered on a spreadsheet in your workbook Prepare a comparative budgeted balance sheet at June 30 next to the first quarter balance sheet If you cannot get your second quarter balance sheet to balance, enter the amount necessary to get it to balance as a separate line item and label this amount plug At the bottom of your worksheet, answer the questions below Round your answers to the nearest whole unit, dollar or one percent as necessary What is the budgeted ROI for the quarter If Menswear, International has established a minimum required rate of return of 18 for all divisions, what is budgeted residual income for the quarter If the division vice president has set a target ROI of 25 for the division, how many units will the company have to sell for the quarter BALANCE SHEET FORMAT FEB MAR APR MAY JUNE 28000 35000 45000 60000 140000 Sales revenue 204000 238000 297500382500 510000 1190000 COLLECTIONS Current month One month ago Two months ago Total collections 297500 459000 184875 941375 74375 95625 127500 119000148750191250 74375 244375303875393125 51000 59500 APRIL MAY JUNE PURCHASES El Total needed Bl Purchases units 35000 40500 75500 31500 44000 45000 54000 99000 40500 58500 60000 36000 96000 54000 42000 140000 36000 176000 31500 144500 Total cost of purchases 220000 292500210000 722500 CASH PAYMENTS Current month Previous month Total payments 110000 146250 105000 85750110000146250 195750256250 251250 361250 342000 703250 APRIL MAY JUNE SELLING ADMIN Variable sales commissions Fixed selling admin 17500 22500 30000 70000 Salaries 22000 14000 2400 15000 22000 14000 2400 15000 22000 14000 2400 15000 66000 42000 Insurance Depreciation Miscellaneous 45000 9000 239200 Total selling admin 73900 78900 86400

Question

Please help with Part IV  preparing a balance sheet  Below are Part I   III for reference   Part II was answered by Sonali  PART I Premier Ties is a division of Menswear, International  The division has an exclusive franchise to act as the nationwide distributor of a designers silk ties  Sales of this product have grown so rapidly over the past few years that the division vice president has decided to implement quarterly budgeting and planning procedures, starting April 1the beginning of the second quarter in the companys fiscal year  The following data has been assembled for the division  Recent and forecasted sales in units are as follows  January (actual) 20,000 February (actual) 24,000 March (actual) 28,000 April 35,000 May 45,000 June 60,000 July 40,000 August 36,000 September 32,000 The increase in sales before and during June reflects the increased activity surrounding Fathers Day  Premier prices this product at 70  over cost  All sales are on credit, net 15 days  Historically, 25  of sales have been collected in the month of sale, 50  in the following month, and the remaining 25  in the second month following the sale  Uncollectible accounts have been insignificant  Accounts receivable at the beginning of the second quarter is $229,500  The division tries to maintain an inventory equal to 90  of the next months sales in units  The ties cost the company $5 each  Premier pays for 50  of its purchases in the month of purchase and the remaining 50  in the month after purchase  Accounts payable for purchases at the beginning of the second quarter is $85,750  Premier pays all other cash operating costs in the month in which they are incurred  The division pays quarterly salaries of $66,000 plus a $0 50 commission per unit sold  Other quarterly operating expenses consist of  utilities, $42,000  insurance, $7,200  depreciation, $45,000  miscellaneous, $9,000  1  Prepare a sales budget in units and dollars by month and for the quarter 2  Prepare a schedule of cash collections from sales by month and for the quarter 3  Prepare a purchases budget in units and dollars by month and for the quarter 4  Prepare a schedule of cash payments for purchases by month and for the quarter 5  Prepare a selling and administrative expense budget in dollars by month and for the quarter  List each expense separatelyyou may assume that quarterly fixed expenses are incurred uniformly during the quarter  A NSWER TO PART 1  PART II Premier plans to purchase land for $25,000 cash in June  The company also declares dividends of $12,000 per quarter  The dividend is declared in the last month of the quarter and paid in the first month of the following quarter  At the end of each quarter, Premier makes a tax payment equal to 20  of budgeted income before tax  For purposes of this project, you may assume that the payment is debited to income tax expense  At the beginning of the year, Premier borrowed $150,000 on a five year 12  note payable with interest to be paid annually at December 31  The divisions balance sheet at March 31 is as follows  PREMIER TIES BALANCE SHEET At March 31 ASSETS Cash $ 44,000 Accounts receivable 229,500 Inventory 157,500 Prepaid insurance 14,400 Property, plant and equipment, net 322,700 Total Assets $768,100 LIABILITIES AND STOCKHOLDERS EQUITY Accounts payable $ 85,750 Dividends payable 12,000 Interest payable 4,500 Note payable 150,000 Common stock, no par 300,000 Retained earnings 215,850 Total Liabilities and Stockholders Equity $768,100 REQUIREMENTS PART 2 Prepare a budgeted income statement for the quarter only using the contribution format  List each cost separately  At the bottom of your worksheet, answer the questions below  Use operating income (income before interest and taxes) in your calculations  Round your answers to the nearest whole unit, dollar or one percent as necessary  Be sure to label your answers  What is the division contribution margin ratio  What is the quarterly budgeted break even point in units  What is the margin of safety in units for the quarter  What is operating leverage for the quarter  If the division wants to earn income before interest and taxes of $350,000 for the quarter, how many units must it sell  ANSWER to Part II Requirement 2 a  Contribution margin ratio   Contribution margin   Sales   $420000   $1190000   35 29    35  b  Budgeted break even point in units   Total fixed costs   Contribution per unit   $169200   $3   56400 units Contribution per unit   $420000   140000 units   $3 c  Margin of safety in units   Actual sales   Break even sales   140000   56400   83600 units d  Operating leverage   Contribution margin   Net operating income   $420000   $250800   1 67   167  e  Number of units to sell for target operating income   (Total fixed costs   Target operating income) Contribution per unit   ($169200   $350000)   $3   173066 67   173067 units PART III Prepare a cash budget by month and for the quarter, listing each category of payment separately  (HINT  Ending cash balance at April 30 should be $24,125 ) PART 4 The balance sheet information provided in the project data has been entered on a spreadsheet in your workbook  Prepare a comparative budgeted balance sheet at June 30 next to the first quarter balance sheet  If you cannot get your second quarter balance sheet to balance, enter the amount necessary to get it to balance as a separate line item and label this amount plug  At the bottom of your worksheet, answer the questions below  Round your answers to the nearest whole unit, dollar or one percent as necessary  What is the budgeted ROI for the quarter  If Menswear, International has established a minimum required rate of return of 18  for all divisions, what is budgeted residual income for the quarter  If the division vice president has set a target ROI of 25  for the division, how many units will the company have to sell for the quarter  BALANCE SHEET FORMAT FEB MAR APR MAY JUNE 28000 35000 45000 60000 140000 Sales revenue 204000 238000 297500382500 510000 1190000 COLLECTIONS Current month One month ago Two months ago Total collections 297500 459000 184875 941375 74375 95625 127500 119000148750191250 74375 244375303875393125 51000 59500 APRIL MAY JUNE PURCHASES El Total needed Bl Purchases   units 35000 40500 75500 31500 44000 45000 54000 99000 40500 58500 60000 36000 96000 54000 42000 140000 36000 176000 31500 144500 Total cost of purchases 220000 292500210000 722500 CASH PAYMENTS Current month Previous month Total payments 110000 146250 105000 85750110000146250 195750256250 251250 361250 342000 703250 APRIL MAY JUNE SELLING   ADMIN Variable sales commissions Fixed selling   admin 17500 22500 30000 70000 Salaries 22000 14000 2400 15000 22000 14000 2400 15000 22000 14000 2400 15000 66000 42000 Insurance Depreciation Miscellaneous 45000 9000 239200 Total selling   admin 73900 78900 86400

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Please help with Part IV: preparing a balance sheet. Below are Part I - III for reference. [Part II was answered by Sonali] PART I

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