Problem 07-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019. ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 80,000 487,5ee 93,390 438,000 1,098,890 640,000 (170,000) 470,000 $ 1,568,899 $ 215,690 32,000 247,690 520,000 767,690 355,600 446,200 801,200 $ 1,568,890 To prepare a master budget for April, May, and June of 2019, management gathers the following information To prepare a master budget for April, May, and June of 2019, management gathers the following information a. Sales for March total 25,000 units. Forecasted sales in units are as follows: April, 25,000; May, 17100; June 22,300, and July 25,000. Sales of 260,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $21.90 per unit b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. The March 31 raw materials inventory is 4.670 units, which complies with the policy. The expected June 30 ending raw materials Inventory is 6,000 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods inventory is 20,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.00 per direct labor hour Depreciation of $40,790 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $5,000 g. Monthly general and administrative expenses include $21000 administrative salaries and 0.9% monthly interest on the long-term note payable h. The company expects 25% of sales to be for cash and the remaining 75% on credit Receivables are collected in full in the month following the sale (none are collected in the month of the sale) 1. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month J. The minimum ending cash balance for all months is $99.000. If necessary, the company borrows enough cash using a short-term note to reach the minimum, Short term notes require an interest payment of 1% at each month-end (before any repayment) . If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance k. Dividends of $30,000 are to be declared and paid in May 1. No cash payments for income taxes are to be made during the second calendar quarter Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter. m. Equipment purchases of $150,000 are budgeted for the last day of June Required: Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cosh sales, which should be rounded down to the nearest whole dollor.: 1. Sales budget 2. Production budget 3. Raw materials budget. 4. Direct labor budget 5. Factory overhead budget 6. Selling expense budget. 7. General and administrative expense budget 8. Cash budget 9. Budgeted Income statement for the entire second quarter (not for each month separately). 10. Budgeted balance sheet Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Calculation of Cash receipts from customers: April May Total budgeted sales Cash sales 25% Sales on credit 75% June Total cash receipts from customers April May June Current month's cash sales Collections of receivables Total cash receipts ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May June Beginning cash balance Total cash available Cash payments for Total cash available Cash payments for OOK int rences 0 Total cash payments Preliminary cash balance Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Budgeted Income statement for the entire second quarter (not for each month separately). (Round your final answers to the nearest whole dollar) ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2019 Sales 1,674,400 Cost of goods sold 0 Operating expenses 0 Total operating expenses Net income 0 Income tax Gross profit $ 0 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2019 Assets 99,000 434,850 120,000 483,003 > E $1,136 853 Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Liabilities $ 790.000 (292 370) 497 630 $ 1634 483 PUCULTIES TUCOVUTO 434,000 V > 120,000 483,003 $1,136 853 Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net > $ 790,000 (292,370) 497 630 Total assets $1,634,483 Liabilities and Equity Liabilities Accounts payable $ 242,300 1,693 x X 51,740 295 733 Income taxes payable Long term note payable Total current liabilities Long-term note payable Stockholders' Equity Common stock > 520 000 o s 355,000 418,740 Retained earnings Total Stockholders' Equity Total Liabilities and Equity 773740 $ 1589.473