Requirement 1. Prepare Griton's operating budget and cash budget far 2019 by cuarter. Required schedules ard budgets include: sales budget, production budget, direct materals budget, direct labor budget, manufacturing averhead bucgat, ost af goods sold budget selling a budge shedule of cash reeips, schecule of cash paymente, and cash budgel. Marulaciuring overheed ouete are alkocaled besed on cirect lebor hours. Round all cakalalions lo the neeresl dollar. dadministrative expense Bagin by praparng the salas bude Grilton Tire Company Salos Budget For the Year Ended December 31, 2019 Total Budgetod tircs to be sald Sales orioe cer unil Todal ooion Prepare the production budget. Review the sales budget you prepared above. Grilton Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Plus Total tires needed Less Budgeted tires to be produced Prepare the direct materials budget. Review the production budget you prepared above. Grilton Tire Company Direct Materials Budget For the Year Ended December 31, 2019 Fourth First Second Third Quarter Quarter Total Quarter Quarter Direct materials per tire Direct materials needed for production Plus Total direct materials needed Less Budgeted purchases of direct materials Direct materials cost per pound Budgeted cost of direct materials Prepare the direct labor budget. (Enter any hours per unit amounts to two decimal places, X.XX, and round all other amounts to the nearest whole number.) Review the production budget you prepared above. Grilton Tire Company Direct Labor Budget For the Year Ended December 31, 2019 Second Third Fourth First Total Quarter Quarter Quarter Quarter Direct labor hours needed for production Budgeted direct labor cost Prepare the manufacturing overhead budget. (Abbreviations used: VOH variable manufacturing overhead; FOH fixed manufacturing overhead.) Review the production budget you prepared above. Review the direct labor budget you prepared above. Grilton Tire Company Manufacturing Overhead Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total VOH cost per tire Budgeted VOH Budgeted FOH Depreciation Utilities, insurance, property taxes Total budgeted FOH Budgeted manufacturing overhead costs Direct labor hours Budgeted manufacturing overhead costs Predetermined overhead allocation rate Before preparing the cost of goods sold budget, calculate the projected manufacturing cost per tire for 2019. (Round all amounts to the nearest cent.) Total projected manufacturing cost per tire for 2019 Now prepare the cost of goods sold budget. Review the sales budget you prepared above. Review the production budget you prepared above. Grilton Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2019 Third First Second Fourth Quarter Quarter Quarter Quarter Total Tires produced and sold in 2019 Total budgeted cost of goods sold Prepare the selling and administrative expense budget. Review the sales budget you prepared above. Grilton Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 Second Fourth First Third Quarter Quarter Quarter Quarter Total Total budgeted selling and administrative expense Prepare the cash receipts budget. (If a box is not used in the table leave the box empty; do not enter a zero.) Review the sales budget you prepared above. Cash Receipts from Customers First Second Third Fourth Quarter Quarter Quarter Quarter Total Total sales First Second Third Fourth Quarter Quarter Quarter Quarter Total Cash Receipts from Customers: Accounts Receivable balance, December 31, 2018 1st Qtr.-Cash sales 1st Qtr.-Credit sales, collection of Qtr. 1 sales in Qtr. 1 1st Qtr-Credit sales, collection of Qtr. Qtr. 2 sales 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 Qtr. 4 Total cash receipts from customers Prepare the cash payments budget. (Round all amounts you entered into the budget to the nearest whole dollar. If a box is not used in the table leave the box empty; do not enter a zero.) Review the direct materials budget you prepared above. Review the direct labor budget you prepared above. Review the manufacturing overhead budget you prepared above. Review selling dministrative expense budget you prepared above. Cash Payments First Second Third Fourth Quarter Quarter Quarter Quarter Total Total direct materials purchases First Second Third Fourth Total Quarter Quarter Quarter Quarter Cash Payments Direct Materials: Accounts Payable balance, December 31, 2018 1st Qtr.-Qtr. 1 direct material purchases paid in Qtr. 1 1st Qtr.-Qtr. 1 direct material purchases paid in Qtr. 2 2nd Qtr.-Qtr. 2 direct material purchases paid in Qtr. 2 2nd Qtr.-Qtr. 2 direct material purchases paid in Qtr. 3 3rd Qtr.-Qtr. 3 direct material purchases paid in Qtr. 3 3rd Qtr.-Qtr. 3 direct material purchases paid in Qtr. 4 4th Qtr.-Qtr. 4 direct material purchases paid in Qtr. 4 Total payments for direct materials Direct Lapor: Total payments for direct labor Manufacturing Overhead: Total payments for manufacturing overhead Selling and Administrative Expenses: Total payments for Selling and Admin. expenses Income Taxes: Total payments for income taxes Capital Expenditures: Total payments for capital expenditures Total cash payments (before interest) Accounts Payable balance, December 31, 2019: 4th Qtr.-Qtr. 4 direct material purchases paid in Qtr. 1 of 2020 Grilton Tire Company Cash Budget For the Year Ended December 31, 2019 Fourth First Second Third Quarter Quarter Quarter Quarter Total Beginning cash balance Cash receipts Cash available Cash payments: Capital expenditu res Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Income taxes Interest expense Total cash payments Ending cash balance before fi nancing Minimum cash balance desired Projected cash excess (de ciency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance Requirement 2. Prepare Grilton's annual financial budget for 2019, including budgeted income statement, budgeted balance sheet, and budgeted statement of caash flows. Begin with the budgeted income statement. (Complete all input boxes. Enter a "O" for any zero balances.) Review the sales budget you prepared above. Review the cost of goods sold budget you prepared above budget you prepared above. Review the cash budget vou prepared above. Grilton Tire Company Budgeted Income Statement For the Year Ended December 31, 2019 Sales Revenue Cost Goods Sold Gross Profit Selling and Administrative Expenses Operating Income Interest Expense Income before Income Taxes Income Tax Expense Net Income Review the income statement you prepared above. Grilton Tire Company Budgeted Balance Sheet December 31, 2019 Assets Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property,Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Review the income statement you prepared above. Grilton Tire Company Budgeted Balance Sheet December 31, 2019 Assets Current Assets: Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets Property,Plant, and Equipment: Equipment Less: Accumulated Depreciation Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Grilton Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash 53,000 Accounts Receivable 22,000 Raw Materials Inventory 10,800 17,400 Finished Goods Inventory Total Current Assets 103,200 Property, Plant, and Equipment: 150,000 Equipment (94,000) 56,000 Less: Accumulated Depreciation $ 159,200 Total Assets Liabilities Current Liabilities: 6,000 Accounts Payable Stockholders' Equity $ Common Stock, no par 100,000 53,200 Retained Earnings 153,200 Total Stockholders' Equity $ 159,200 Total Liabilities and Stockholders' Equity EA (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) a. Budgeted sales are 2,000 tires for the first quarter and expected to increase by 100 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account b. Finished Goods Inventory on December 31, 2018 consists of 600 tires at $29 each. c. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for 2020 are expected be 2,400 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 $9.00 per pound Desired ending Raw Materials Inventory is 20% of the next quarter's direct materials needed for production; 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 $16 per hour. h. Variable manufacturing overhead is $2 per tire Fixed manufacturing overhead includes $5,500 per quarter in depreciation and $3,700 per quarter for other costs, such as utilities, insurance, and property taxes j. Fixed selling and administrative expenses include $9,000 per quarter for salaries; $5,400 per quarter for rent; $1,050 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. Capital expenditures include $30,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 80% in the quarter of the sale and 20% 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 70% in the quarter purchased and 30% 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 $3,000 per quarter and is paid in the quarter incurred. q. Grilton desires to maintain a minimum cash balance of $50,000 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. f