Review the production budget you prepared above. Review the direct materials budget you prepared above. Review the selling and administrative expense budget you prepared above. Review the cash receipts budget you prepared above. Review the cash payments budget you prepared above. Review the cash budget you prepared above. 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 (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 1,700 tires for the first quarter and expected to increase by 250 tires per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 200 tires at $32 each. c. Desired ending Finished Goods Inventory is 20% of the next quarter's sales, first quarter sales for 2020 are expected be 2,700 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 400 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 $5.00 per pound. f. Desired ending Raw Materials Inventory is 40% of the next quarter's direct materials needed for production: desired ending inventory for December 31, 2019 is 400 pounds, indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.80 hours of direct labor, direct labor costs average $20 per hour. h. Variable manufacturing overhead is $5 per tire. i. Fixed manufacturing overhead includes $4,000 per quarter in depreciation and $50,864 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $10,000 per quarter for salaries: $4,200 per quarter for rent: $1,800 per quarter for insurance, and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 3% of sales I. Capital expenditures include $25,000 for new manufacturing equipment to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 75% in the quarter of the sale and 25% 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 80% in the quarter purchased and 20% in the following quarter December 31, 2018, Accounts Payable is paid in the first quarter of 2019. 0. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $4,500 per quarter and is paid in the quarter incurred. 9. Grilton desires to maintain a minimum cash balance of $65,000 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 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter. i Data Table Grilton Tire Company Balance Sheet December 31, 2018 Assets Current Assets: Cash Accounts Receivable 69,000 45,000 2,000 6,400 Raw Materials Inventory $ 122,400 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 155,000 (68,000) 87,000 Less: Accumulated Depreciation 209,400 15,000 Total Assets Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par $ Retained Earnings Total Stockholders' Equity 130,000 64,400 194,400 $ 209,400 Total Liabilities and Stockholders' Equity [ Print Done ] i Reference Reference - X acing cem Eet.) Grilton Tire Company Direct Materials Budget For the Year Ended December 31, 2019 First Second Quarter Quarter Grilton Tire Company Production Budget For the Year Ended December 31, 2019 First Second Third Quarter Quarter Quarter Third Fourth Fourth Quarter Quarter Total Quarter Total 1,890 2,000 2,250 2.500 8,640 Budgeted tires to be produced Direct materials per tire Direct materials needed for production 1,700 390 1,950 440 2,200 490 2.450 540 8,300 540 Budgeted tires to be sold Plus: Desired tires in ending inventory Total tires needed Less: Tires in beginning inventory 4,500 2,390 3,780 1,600 5,000 400 17,280 400 2,990 2,090 200 2,690 440 8,840 200 Indt 2,000 390 490 Plus: Desired direct materials in ending inventory Total direct materials needed 4,000 1,800 5,800 1.600 5,380 6,500 5,400 1,890 2,000 2,250 2,500 8,640 17,680 400 Budgeted tires to be produced 400 1.800 d all pare Ense ared pard ve. d ab Less: Direct materials in beginning inventory Budgeted purchases of direct materials 4.980 i Reference Direct materials cost per pound 2,000 3,400 5.00 $ 17,000$ $ 4,200 5.00 $ 21,000$ 5.00 $ 24,900 $ 4,700 5.00 $ 23,500 $ 17,280 5.00 86,400 Budgeted cost of direct materials ce SI 201 Print Done Total Grilton Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Salaries Expense 10,000 $ 10,000 $ 10,000 $ 10,000 $ Rent Expense 4,200 4,200 4,200 4,200 Insurance Expense 1,800 1,800 1,800 1,800 Depreciation Expense 2,000 2,000 2,000 2,000 Supplies Expense 4,080 5,280 5,880 22,080 22.680 S 23,280 S 23,880S Total budgeted selling and administrative expense 40,000 16,800 7,200 8,000 19,920 91,920 4.680 Print Done hen click Check Answer. Cash Receipts from Customers First Second Third Fourth Quarter Quarter Quarter Quarter $ 136,000 $ 156,000$ 176,000 $ 196,000$ First Second Third Fourth Quarter Quarter Quarter Quarter Total 664.000 Total sales Total $ 45,000 40,800 71,400 $ 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. 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 Qir. 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 Qir.Credit sales, collection of Qtr. 4 sales in Qtr. 4 23,800 46,800 81,900 $ 27,300 52,800 92,400 $ 30,800 58,800 102,900 192,500 $ 157,200 S 15 Total cash receipts from customers 152.500 $ 172.500 $ 674,700 Accounts Receivable balance, December 31, 2019: 4th Qtr.-Credit sales, collection of Qtr. 4 sales in Qtr. 1 of 2020 $ 34,300 Cash Payments Total 86.400 Total direct materials purchases First Second Third Quarter Quarter Quarter Quarter 24,900 $ 21,000 $ 23.500 $ 17,000 S First Second Third Fourth Quarter Quarter Quarter Quarter $ Total $ 15,000 19.920 s Cash Payments Direct Materials: Accounts Payable balance, December 31, 2018 1st otr.- Qtr. 1 direct material purchases paid in Qtr. 1 1st Qtr.-Otr. 1 direct material purchases paid in Qtr. 2 2nd Qtr - Qtr. 2 direct material purchases paid in Ctr. 2 T 2nd Qt-Qur. 2 direct material purchases paid in Citr. 3 3rd Qtr- tr. 3 direct material purchases paid in tr. 3 3rd Otr- tr. 3 direct material purchases paid in Qtr. 4 4th Qtr-Citr. 4 direct material purchases paid in Qtr. 4 Total payments for direct materials L 4.980 16.800 S 4200 18.800 $ 4,700 13,800 18.300 S 34.9201 21.7801 2 3.000 98.000 Direct Labor: Total payments for direct labor 30.240 32,000 36,000 40,000 138,240 Manufacturing Overhead: Variable manufacturing overhead Utilities, insurance, property taxes Total payments for manufacturing overhead 8.450 50.884 60.314 10,000 11.250 12,500 50.86450,88450,864 60.864 62,114 63,364 43.200 203,456 246,656 Selling and Administrative Expenses: Salaries Expense Rent Expense Insurance Expense Supplies Expense Total payments for Selling and Admin. expenses 10,000 10,000 4.2004,200 1,800 1,800 4,080 4.680 20,080 20,680 10,000 10,000 4.2004,200 1.800 1.800 5.280 5 ,880 21,280 21,880 40.000 16.800 7.200 19,920 83,920 Income Taxes: Total payments for income taxes 4,500 4,500 4,500 4.500 18.000 Capital Expenditures: Total payments for capital expenditures 25,00 25.000 $ S Total cash payments before interest) 175,054 $ 139,824 $ 146,894 $ 148,044 609,816 Accounts Payable balance, December 31, 2019: 4th Otr-tr. 4 direct material purchases paid in Qtr 1 of 2020 $ 3.400 i Reference A Reference - X Grilton Tire Company Cash Budget For the Year Ended December 31, 2019 First Second | Third Fourth Quarter Quarter Quarter Quarter 69,000 $ 65,146 S 65,4025 88,948$ 157,200 152,500 172,500 192,500 226,200 217,646 237,902 281,448 Beginning cash balance Cash receipts Total 69,000 674,700 743,700 Grilton Tire Company Budgeted Income Statement For the Year Ended December 31, 2019 Sales Revenue S 664,000 Cost of Goods Sold 463,240 Gross Profit 200,760 Selling and Administrative Expenses 91,920 Operating Income 108,840 Interest Expense Income before Income Taxes 108,360 18,000 Income Tax Expense 90,360 Net Income Cash available 480 21,780 23,000 25,000 34,920 30,240 60,314 20,080 4,500 18,300 40,000 63,364 21,880 4,500 25,000 98,000 138,240 246,656 83,920 18,000 480 36,000 62,114 21,280 4,500 60 146,954 Print Cash payments: Capital expenditures Purchases of direct materials Direct labor Manufacturing overhead Selling and administrative expenses Income taxes Interest expense Total cash payments Ending cash balance before fiOnancing Minimum cash balance desired Projected cash excess (de Ociency) Financing Borrowing Principal repayments Total effects of financing Done 60,864 20,680 4,500 420 140,244 77,402 (65,000) 12,402 175,054 148,044 610,296 51,146 (65,000) (13,854) 90,948 (65,000) 25,948 133,404 (65,000) 133,404 (65,000) 68,404 68,404 14,000 14,000 (14,000) 14,000 (12,000) 12,000) 65,402 $ (2,000) (2,000) 88,948 65,146 133,404 Ending cash balance Print Done