Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prepare the cash receipts budget. This is what i go so far. PLZ help Also I realy dont know if the 35,000 is suppose to

Prepare the cash receipts budget. This is what i go so far. PLZ help

Also I realy dont know if the 35,000 is suppose to be there or not, but please feel free to change it. I got that number by the accounts recievable on the balance sheet, located on the bottom of the page. Sorry the balance sheet looks like that

Cash Receipts from Customers

First

Second

Third

Fourth

Quarter

Quarter

Quarter

Quarter

Total

Total sales

112,000

128,000

144,000

160,000

544,000

First

Second

Third

Fourth

Quarter

Quarter

Quarter

Quarter

Total

Cash Receipts from Customers:

Accounts Receivable balance, December 31, 2018

35,000

1st Qtr.Cash sales

72,800

1st Qtr.Credit sales, collection of Qtr. 1 sales in Qtr. 1

1st Qtr.Credit sales, collection of Qtr. 1 sales in Qtr. 2

2nd Qtr.Cash sales

2nd Qtr.Credit sales, collection of Qtr. 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 Qtr. 3 sales in Qtr. 3

3rd Qtr.Credit sales, collection of Qtr. 3 sales in Qtr. 4

4th Qtr.Cash sales

4th Qtr.Credit sales, collection of Qtr. 4 sales in Qtr. 4

Total cash receipts from customers

Accounts Receivable balance, December 31, 2019:

4th Qtr.Credit sales, collection of Qtr. 4 sales

in Qtr. 1 of 2020

Additionl info and Balance sheet below:

a.Budgeted sales are 1,400 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 40% of total sales, with the remaining 60%of sales on account.

b.Finished Goods Inventory on December31,2018 consists of 600 tires at $36each.

c.Desired ending Finished Goods Inventory is 20% of the next quarter's sales; first quarter sales for 2020 are expected be 2,200 tires. FIFO inventory costing method is used.

d. Raw Materials Inventory on December 31, 2018, consists of 1,200 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 $9.50 per pound.

f.Desired ending Raw Materials Inventory is 40%of the next quarter's direct materials needed forproduction; desired ending inventory for December 31, 2019 is 1,200 pounds; indirect materials are insignificant and not considered for budgeting purposes.

g.Each tire requires 0.20 hours of direct labor; direct labor costs average $10 per hour.

h.

Variable manufacturing overhead is $4 per tire.

i

Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $5,968 per quarter for other costs, such as utilities, insurance, and property taxes

j. Fixed selling and administrative expenses include$12,000 per quarter for salaries; $5,700 per quarter forrent; $600 per quarter for insurance; and $500 per quarter for depreciation.

k. Variable selling and administrative expenses include supplies at 2% of sales.

l. Capital expenditures include $10,000 for new manufacturing equipment, to be purchased and paid in the first quarter.

m. Cash receipts for sales on account are 65% in the quarter of the sale and 35% 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 4,000 per quarter and is paid in the quarter incurred.

q. Glider desires to maintain a minimum cash balance of 35,000 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 8% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter

BALANCE SHEET:

The Gilder Tire Company manufactures racing tires for bicycles. Gilder sells tires for $80 each. Gilder is planning for the next year by developing a master budget by quarters. Gilder's balance sheet for December 31, 2018, follows:

Gilder Tire Company

Balance Sheet

December 31, 2018

Assets

Current Assets:

Cash

$40,000

Accounts Receivable

35,000

Raw Materials Inventory

11,400

Finished Goods Inventory

21,600

Total Current Assets

$108,000

Property, Plant, and Equipment:

Equipment

150,000

Less: Accumulated Depreciation

(68,000)

82,000

Total Assets

$190,000

Liabilities

Current Liabilities:

Accounts Payable

$10,000

Stockholders' Equity

Common Stock, no par

$110,000

Retained Earnings

70,000

Total Stockholders' Equity

180,000

Total Liabilities and Stockholders' Equity

$190,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Complete Guide

Authors: Gerardus Blokdyk

2023rd Edition

1038805538, 978-1038805539

More Books

Students also viewed these Accounting questions