The Grayson The Company manufactures racing tires for bicycles. Graysansels tres for $30 cach. Grayson is planning for the next year by developing a master budget by quarters, Grayson's balance sheet for December 31, 2018, follows: Click the icon to view the balance sheet Other data for Grayson Tire Company Click the icon to view the other data.) Read the requirements E Requirement 1. Prepare Grayson's operating budget and cash budget for 2019 by quarter. Required schedules and bucgets include: sales budget production budget direct materials budget direct labor tudget manufacturing overtread budget, cost of gocds sold budget, seling and acministrative expense budge cash receipts, schedule of cash payments, and cash budget Manufacturing overtread costs are allocated based on direct labor hours. Rcurd all calculations to the nearest dollar. Begin by preparing the sales budget. i Dala Table Grayson Tire Company Sales Budget For the Year Ended December 31, 2019 Grayson Tire Company First Second Third Fourth Balance Sheet Quarter Quarter Quartet Quarter Total December 31, 2018 Budgeted tires to be sold Assets Sales price per unit Current Assets Total sales Cash 5 68,000 Prepare the production budget. Accounts Receivable 30,000 Raw Materials Inventory 4,400 Review the sales budget you prepared above. Finished Goods Inventory 12,000 Grayson Tire Company Production Budget Tolal Current Assets S 114,400 For the Year Ended December 31, 2019 Property, Plant, and Equipment: First Second Third Fourth 208,000 Ecuipment (50,000 158,000 Quarter Quarter Quarter Quarter Total Less: Accumulated Depreciation Total Assets S 270,400 Plus: Liabilities Total tires needed Current Labilities: Less: Accounts Payable S 9,000 Budgeted tires to be produced Stockholders' Equity Common Stock no par $ 140,000 Prepare the direct matcrials budget. Recained Earnings 121,400 Review the production budget you prepared above. Total Stockholders' Equity 281,400 Grayson Tire Company Total Liabilities and Stockholders' Equity 270,400 Chopee from any list or enter any number in the input fields and then continue to the next question. Print Done Grayson Tire Company Direct Materials Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total 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. Grayson Tire Company Direct Labor Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total 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. Grayson 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. Grayson Tire Company Cost of Goods Sold Budget For the Year Ended December 31, 2019 First Second Third 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. Grayson Tire Company Selling and Administrative Expense Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Total budgeted selling and administrative expense 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. 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 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 in Qtr. 4 Total cash receipts from customers Accounts Receivable balance, December 31, 2019: 4th Qtr.Credit sales, collection of Qtr. 4 sales in Qtr. 1 of 2020 Prepare the cash payments budget. (Round all amounts you entered into the budget to the nearest whole dollar. If an input field is not used in the table leave the input field 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 the selling and administrative expense budget you prepared above. Cash Payments First Second Third Fourth Quarter Quarter Quarter Quarter Total Total direct materials purchases Second Third Fourth First Quarter Quarter Quarter Quarter Total 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 Labor: Total payments for direct labor Manufacturing Overhead: 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) 2019 Accounts Payable balance, December 4th Qir. Qir. 4 direct material purchases paid in Cor. 1 of 2020 Prepare the cash budget. (Complete al input fields. Enter a "d" for any zero balances. Round al amounts entered into the cash budget to the nearest whole dallar. Enter a cash deficiency, principal repayments, and/or a net repayment on financing with a minus sign or parentheses.) Review the cash receipts budget you prepared above. Review the cash payments budget you prepared above. Grayson Tire Company Cash Budget For the Year Ended December 31, 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Total Beginning cash balance Cash receipts Cash available 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 financing Minimum cash balance desired Projected cash excess (de ciency) Financing: Borrowing Principal repayments Total effects of financing Ending cash balance Requirement 2. Prepare Grayson's annual financial budget for 2019, including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows. Begin with the budgeted income statement. (Complete all input fields. Enter a "0" for any zero balances.) Review the sales budget you prepared above. Review the cost of goods sold budget you prepared above. Review the selling and administrative expense budget you prepared above. Review the cash budget you prepared above. Grayson Tire Company Budgeted Income Statement For the Year Ended December 31, 2019 Sales Revenue Cost of Goods Sold Gross Profit Selling and Administrative Expenses Operating Income Interest Expense Income before Income Taxes Income Tax Expense Net Income Prepare the budgeted balance sheet. (Round to the nearest whole dollar.) 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. Grayson 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 I II Liabilities Current Liabilities: Accounts Payable Stockholders' Equity Common Stock, no par Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity More Info - 2 ol a. (Unless otherwise noted, assume all of the following events occurred during 2018 and that any balances given are stated as of December 31, 2018.) 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 10% of total sales, with the remaining 90% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 400 tires at $30 each. Desired ending Finished Goods Inventory is 50% of the next quarter's sales; first quarter sales for C. 2020 are expected be 2,400 tires. FIFO inventory costing method is used. Raw Materials Inventory on December 31, 2018, consists of 800 pounds of rubber compound used to d. manufacture the tires. Direct materials requirements are 2 pounds of a rubber compound per tire. The cost of the compound e. is $5.50 per pound. Desired ending Raw Materials Inventory is 10% of the next quarter's direct materials needed for production; desired ending inventory for December 31, 2019 is 800 pounds; indirect materials are f. insignificant and not considered for budgeting purposes. g. Each tire requires 0.40 hours of direct labor; direct labor costs average $20 per hour. Variable manufacturing overhead is $5 per tire. Fixed manufacturing overhead includes $2,000 per quarter in depreciation and $27,610 per quarter for i. other costs, such as utilities, insurance, and property taxes. Fixed selling and administrative expenses include $10,000 per quarter for salaries; $5,700 per quarter j. for rent; $900 per quarter for insurance; and $1,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 1% of sales. Capital expenditures include $30,000 for new manufacturing equipment, to be purchased and paid in 1. the first quarter. 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; m. uncollectible accounts are considered insignificant and not considered for budgeting purposes. Direct materials purchases are paid 60% in the quarter purchased and 40% in the following quarter; December 31, 2018, Accounts Payable is paid in the first quarter of 2019. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter o. incurred. p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. Grayson 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 5% per year and paid at the beginning of the quarter based on the amount outstanding from the previous q. quarter. n. Print Done Done