Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information (The following information apples to the questions disployed below) We revaly need to get this new material handing equyment in operation just after

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Required information (The following information apples to the questions disployed below) "We revaly need to get this new material handing equyment in operation just after the now year begins I hope we can tinance it largely with cash and marketoble securites, but if necessary wo can get a short-term loan dowm thmetroBank. This statement by Bleth Davies. Lowry, president of Intercoastal Electronics Compary. concluded a meeting she hed called with the firm's top management intercoastal is a snlil, ropidly growing wholetale of consumer electronic products. The firm's main product lines are smail kitchen appliances and powit tools. Marcia Wilcox, Intercoustals General Manager of Marketing. hes recently completed a sales forecost She belleves the compary's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects talus to reminin constant for several months intercoastal's projected balance sheet as of December 31,200, k as follows. Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x in in the process, the following information has been accumulated: 1. Projected sales for December of 200 are $500,000. Credit sales typically are 70 percent of total sales, Intercoastal's credit experience indicates that 20 pefcent of the credit sales are collected during the month of sale, and the temainder. are collected during the following month. 2 intercoastals coat of goods sold generally runs at 70 percent of sales. Irventory is purchased on occourit, and 30 percent of each month's purchases are poid during the month of purchase. The remainder is paid during the following month in order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to haif of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other manthly expenses will be as follens In addition, sales commissions run at the rate of 1 percent of sales: 4. Intercoastars president. Davies-Lowry, has indicated that the firm should invest $125,000 in an automated ifventory. handing system to control the movement of inventory in the tirm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities However, Davies- towry believes that Intercpastal needs to keep a minimam cash balance of $25,000. If necessary, the remainder at the equipment purchoses wil be financed using short-term credit from a local bank. The- minimum period for such a loan is thiree months. Hanson believes short-teem interest rates will be 10 percent per year at the time of the equipment purchase5. If a loan is necessary. Davies-lowry has decided it should be paid off by the end of the first quarter if porsible 5. Intercoastars board of directors has indicated an intention to declare and pay dividends of $50.000 on the last day of 3. Hanson has estimated that Intercoastaf's other monthly expenses wil be as follows In addition, sales commissions run at the rate of 1 percent of sales: 4. Intercoastal's president, Davies Lowry, has indicated that the firm should invest $125,000 in an automated inventoryhandling system to control the movement of imventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securties. However, Dovies-Lowry believes that intercoastal needs to keep a minimum cash balance of $25.000 if necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary. Davies-Lowry has decided it should be paid off by the end of the first quarter if possible 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter 6. The interest on ary short-term borrowing will be paid when the loan is repaid. Interest on intercoastals bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannualiy on February 28 and August 31 for the preceding six-month period. Required: Prepare intercoastal Electronics Company's master budget for the first quarter of 20x by completing the following schedules and statements 4. Cash disbursements budget (Round your inventory purchases up to the nearest whole doller.) 5. Complete the first thiree lines of the summary cash budget. Then do the analysis of short term financing needs in requirernent 6 . Then finish requlement 5 . 7. Prepare Intercoastal Electronics budgeted income statement for the first quarter of 20x1. (lgnore income taxes) 8. Prepare intercoastal Electronics' budgeted statement of retained earnings for the first quarter of 201. 9. Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1. (Hint On March 31, 20x1, Bond Interest Payable is $1,500 and Property Taxes Payable is $900 ) (Round your answers to the nearest whole dollar.) Required information (The following information apples to the questions disployed below) "We revaly need to get this new material handing equyment in operation just after the now year begins I hope we can tinance it largely with cash and marketoble securites, but if necessary wo can get a short-term loan dowm thmetroBank. This statement by Bleth Davies. Lowry, president of Intercoastal Electronics Compary. concluded a meeting she hed called with the firm's top management intercoastal is a snlil, ropidly growing wholetale of consumer electronic products. The firm's main product lines are smail kitchen appliances and powit tools. Marcia Wilcox, Intercoustals General Manager of Marketing. hes recently completed a sales forecost She belleves the compary's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales. Then Wilcox expects talus to reminin constant for several months intercoastal's projected balance sheet as of December 31,200, k as follows. Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x in in the process, the following information has been accumulated: 1. Projected sales for December of 200 are $500,000. Credit sales typically are 70 percent of total sales, Intercoastal's credit experience indicates that 20 pefcent of the credit sales are collected during the month of sale, and the temainder. are collected during the following month. 2 intercoastals coat of goods sold generally runs at 70 percent of sales. Irventory is purchased on occourit, and 30 percent of each month's purchases are poid during the month of purchase. The remainder is paid during the following month in order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to haif of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercoastal's other manthly expenses will be as follens In addition, sales commissions run at the rate of 1 percent of sales: 4. Intercoastars president. Davies-Lowry, has indicated that the firm should invest $125,000 in an automated ifventory. handing system to control the movement of inventory in the tirm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities However, Davies- towry believes that Intercpastal needs to keep a minimam cash balance of $25,000. If necessary, the remainder at the equipment purchoses wil be financed using short-term credit from a local bank. The- minimum period for such a loan is thiree months. Hanson believes short-teem interest rates will be 10 percent per year at the time of the equipment purchase5. If a loan is necessary. Davies-lowry has decided it should be paid off by the end of the first quarter if porsible 5. Intercoastars board of directors has indicated an intention to declare and pay dividends of $50.000 on the last day of 3. Hanson has estimated that Intercoastaf's other monthly expenses wil be as follows In addition, sales commissions run at the rate of 1 percent of sales: 4. Intercoastal's president, Davies Lowry, has indicated that the firm should invest $125,000 in an automated inventoryhandling system to control the movement of imventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securties. However, Dovies-Lowry believes that intercoastal needs to keep a minimum cash balance of $25.000 if necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary. Davies-Lowry has decided it should be paid off by the end of the first quarter if possible 5. Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter 6. The interest on ary short-term borrowing will be paid when the loan is repaid. Interest on intercoastals bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannualiy on February 28 and August 31 for the preceding six-month period. Required: Prepare intercoastal Electronics Company's master budget for the first quarter of 20x by completing the following schedules and statements 4. Cash disbursements budget (Round your inventory purchases up to the nearest whole doller.) 5. Complete the first thiree lines of the summary cash budget. Then do the analysis of short term financing needs in requirernent 6 . Then finish requlement 5 . 7. Prepare Intercoastal Electronics budgeted income statement for the first quarter of 20x1. (lgnore income taxes) 8. Prepare intercoastal Electronics' budgeted statement of retained earnings for the first quarter of 201. 9. Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1. (Hint On March 31, 20x1, Bond Interest Payable is $1,500 and Property Taxes Payable is $900 ) (Round your answers to the nearest whole dollar.)

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

Contemporary Auditing Real Issues And Cases

Authors: Michael C. Knapp, Loreen Knapp

5th Edition

032418834X, 978-0324188349

More Books

Students also viewed these Accounting questions

Question

mple 10. Determine d dx S 0 t dt.

Answered: 1 week ago

Question

16. What makes them unique? (special features of the group)

Answered: 1 week ago