Prepare Gerards annual financial budget for 2019, including budgeted income statement and balance sheet
P22-41A Completing a comprehensive budgeting problem-manufacturing company The Gerard Tire Company manufactures for $90 each. Gerard is planning for the next year by developing a master budget by quarters. Gerard's balance sheet for December 31, 2018, follows racing tires for bicycles. Gerard sells tires GERARD TIRE COMPANY Balance Sheet December 31, 2018 Assets Current Assets 56,000 20,000 5,100 9,900 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets 91,000 Property, Plant, and Equipment: 194,000 (42,000) Equipment Less: Accumulated Depreciation 152,000 Total Assets S 243,000 Liabilities Current Liabilities: Accounts Payable 8,00 Stockholders' Equity Common Stock, no par Retained Earnings 120,000 15,000 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 235,000 243,000 Other data for Gerard Tire Company a. Budgeted sales are 1,500 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account b. Finished Goods Inventory on December 31, 2018, consists of 300 tires at $33 each. c. Desired ending Finished Goods Inventory is 30% of the next quarters sales; first quarter sales for 2020 are expected to be 2,300 tires. FIFO inventory costing method is used d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds of rub- ber compound used to manufature the tires Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $8.50 per pound. e. P22-41A Completing a comprehensive budgeting problem-manufacturing company The Gerard Tire Company manufactures for $90 each. Gerard is planning for the next year by developing a master budget by quarters. Gerard's balance sheet for December 31, 2018, follows racing tires for bicycles. Gerard sells tires GERARD TIRE COMPANY Balance Sheet December 31, 2018 Assets Current Assets 56,000 20,000 5,100 9,900 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets 91,000 Property, Plant, and Equipment: 194,000 (42,000) Equipment Less: Accumulated Depreciation 152,000 Total Assets S 243,000 Liabilities Current Liabilities: Accounts Payable 8,00 Stockholders' Equity Common Stock, no par Retained Earnings 120,000 15,000 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 235,000 243,000 Other data for Gerard Tire Company a. Budgeted sales are 1,500 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account b. Finished Goods Inventory on December 31, 2018, consists of 300 tires at $33 each. c. Desired ending Finished Goods Inventory is 30% of the next quarters sales; first quarter sales for 2020 are expected to be 2,300 tires. FIFO inventory costing method is used d. Raw Materials Inventory on December 31, 2018, consists of 600 pounds of rub- ber compound used to manufature the tires Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound is $8.50 per pound. e
