The Goldberg Tire Company manufactures racing tires for bicycles. Goldberg sells tires for $50 each. Goldberg is planning for the next year by developing a master budget by quarters. Goldbergs balance sheet for December 31, 2014, follows

Goldberg Tire Company
Balance Sheet December 31, 2014
Assets
Current Assets
Cash	20,000
Accounts Receivable	25,000
Raw Materials Inventory	3,000
Finished Goods Inventory	5,800
Total Current Assets	53,800
Property Plant and Equipment
Equipment	175,000
Less: Accumulated Depreciation	-57,000	118,000
Total Assets	171,800
Liabilities
Current Liabilities
Accounts Payable	5,000
Stockholders Equity
Common Stock	125,000
Retained Earnings	41,800
Total Stockholders Equity	166,800
Total Liabilities and Stockholders Equity	171,800

Other Data for Goldberg Tire Company:

A) Budgeted sales are 900 tires for the first quarter and expected to increase by 100 times per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% sales on account

B) Finished Goods Inventory on December 31 consists of 200 tires at $29 each

C) Desired ending Finished Goods Inventory is 40% of the next quarters sales; first quarter sales for 2016 are expected to be 1300 tires. FIFO inventory costing method is used

D) Direct materials cost is $15 per tire

E) Desired ending Raw Materials Inventory is 20% of the next quarters direct materials needed for production; desired ending inventory for December 31 is $3000; indirect materials are insignificant and not considered for budgeting purposes

F) Each tire requires 0.20 hours of direct labor; direct labor costs average $18 per hour

G) Variable manufacturing overhead is $2 per tire

H) Fixed manufacturing overhead includes $3000 per quarter in depreciation and $4232 per quarter for other costs, such as utilities, insurance, and property taxes

I) Fixed selling and administrative expenses include $9000 per quarter for salaries; $3000 per quarter for rent; $600 per quarter for insurance; and $500 per quarter for depreciation

J) Variable selling and administrative expenses include supplies at 1% of sales

K) Capital expenditures include $20000 for new manufacturing equipment, to be purchased and paid for the first quarter

L) Cash receipts for sales on account are 50% in the quarter of the sale and 50% in the quarter following the sales December 31, 2014, Accounts Receivable is received in the first quarter of 2015; uncollectible accounts are considered insignificant and not considered for budgeting purposes

M) Direct materials purchases are paid 75% in the quarter purchased and 25% in the following quarter; December 31, 2014, Accounts Payable is paid in the first quarter of 2015

N) Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred

O) Income tax expense is incurred is projected at $2000 per quarter and is paid in the quarter incurred

P) Goldberg desires to maintain a minimum cash balance of $25000 and borrows from the local bank as needed in increments of $1000 at the beginning of the quarter; principle repayments are made at the beginning of the quarter when excess funds are available and in increments of $1000; interest is 12% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter

Requirements

1) Prepare Goldbergs operating budget and cash budget for 2015 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, cash receipts, cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours.

2) Prepare Goldbergs annual financial budget for 2015, including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows