Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stillwater Video Company, Inc. produces and markets two popular video games, High Range and Star Boundary. The closing account balances on the company's balance sheet

Stillwater Video Company, Inc. produces and markets two popular video games, High Range and Star Boundary. The closing account balances on the company's balance sheet for the last year are as follows: Cash, $18,735; Accounts Receivable, $19,900; Materials Inventory, $18,510; Work in Process Inventory, $24,680; Finished Goods Inventory, $21,940; Prepaid Expenses, $3,420; Plant and Equipment, $262,800; Accumulated Depreciation-Plant and Equipment, $55,845; Other Assets, $9,480; Accounts Payable, $52,640; Mortgage Payable, $70,000; Common Stock, $90,000; and Retained Earnings, $110,980.

Operating budgets for the first quarter of the coming year show the following estimated costs: direct materials purchases, $58,100; direct materials usage, $62,400; direct labor expense, $42,880; overhead, $51,910; selling expenses, $35,820; general and administrative expenses, $60,240; cost of goods manufactured, $163,990; and cost of goods sold, $165,440. Estimated ending cash balances are as follows: January, $34,610; February, $60,190; and March, $54,802. The company will have no capital expenditures during the quarter.

Sales are projected to be $125,200 in January, $105,100 in February, and $112,600 in March. Accounts receivable are expected to double during the quarter, and accounts payable are expected to decrease by 20 percent. Mortgage payments for the quarter will total $6,000 of which $2,000 will be interest expense. Prepaid expenses are expected to go up by $20,000, and other assets are projected to increase by 50 percent over the budgeted period. Depreciation for plant and equipment (already included in the overhead budget) averages 5 percent of total plant and equipment for the year. Federal income taxes (34 percent of profits) are payable in April. The company pays no dividends.

  1. Prepare a budgeted income statement for the quarter ended March 31.

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

Financial Accounting Introduction To Concepts Methods And Uses

Authors: Clyde P. Stickney, Roman L. Weil

11th Edition

0324222971, 978-0324222975

More Books

Students also viewed these Accounting questions

Question

b. A workshop on stress management sponsored by the company

Answered: 1 week ago