The Gerard Tire Company manufactures racing tires for bicycles. Gerard sells tires Other data for Gerard Tire Company: for $90 each. Gerard is planning for the next year by developing a master budget (Click the icon to view the other data.) by quarters. Gerard's balance sheet for December 31, 2024, follows: (Click the icon to view the balance sheet.) Read the requirements. ) More Info Data Table - X Gerard Tire Company C Balance Sheet December 31, 2024 Assets Current Assets Cash $ 56.000 Accounts Receivable 20,000 Raw Materials Inventory 5,100 9,900 Finished Goods Inventory $ 91,000 Total Current Assets Property, Plant, and Equipment: Equipment a. Budgeted sales are 1,500 tires for the first quarter and expected to increase by 200 tires per quarter. Cash sales are expected to be 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31, 2024 consists of 300 tires at $33 each. Desired ending Finished Goods Inventory is 30% of the next quarter's sales, first quarter sales for 2026 are expected be 2,300 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2024, consists of 600 pounds of rubber compound used to manufacture the tires. e. Direct materials requirements are two pounds of a rubber compound per tire. The cost of the compound is $8.50 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, 2025 is 600 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.40 hours of direct labor, direct labor costs average $12 per hour. h. Variable manufacturing overhead is $4 per tire. i. Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $16,770 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $12,500 per quarter for salaries; $3,000 per quarter for rent; $450 per quarter for insurance; and $2,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. 1. Capital expenditures include $15,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; December 31, 2024, Accounts Receivable is received in the first quarter of 2025; uncollectible accounts are considered insignificant and not considered for budgeting purposes. n. Direct materials purchases are paid 60% in the quarter purchased and 40% in the following quarter, December 31, 2024, Accounts Payable is paid in the first quarter of 2025. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p Income tax expense is projected at $1,500 per quarter and is paid in the quarter incurred. Gerard desires to maintain a minimum cash balance of $55,000 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 6% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter 194,000 (42,000) Less: Accumulated Depreciation 152,000 243,000 Total Assets Liabilities Current Liabilities: Accounts Payable $ 8,000 0 Common Stock, no par Stockholders' Equity $ 120,000 115,000 Retained Earnings q Total Stockholders' Equity 235,000 $ Total Liabilities and Stockholders' Equity 243,000 Print Done Print Done Second Quarter Third Quarter Fourth Quarter Total Second Quarter Third Quarter Fourth Quarter Total 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 the selling and administrative expense budget you prepared above. Cash Payments First Quarter Total direct materials purchases First Quarter Cash Payments Direct Materials: Accounts Payable balance, December 31, 2024 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 Labor: Total payments for direct labor