Question
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started