The Grayson Tire Company manufactures racing tires for bicycles. Grayson sells tires for $70 each. 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.) Data Table Balance Sheet December 31, 2018 Assets fet co: Current Assets: Cash $ Accounts Receivable 65,000 32,000 9,500 15,000 Raw Materials Inventory $ 121,500 Finished Goods Inventory Total Current Assets Property, Plant, and Equipment: Equipment 168,000 (39,000) 129,000 Less: Accumulated Depreciation $ 250,500 Total Assets Liabilities Current Liabilities: Accounts Payable 7,500 Stockholders' Equity $ Common Stock, no par 140,000 103,000 Retained Earnings Total Stockholders' Equity 243,000 250,500 Total Liabilities and Stockholders' Equity Print Done More Info mbil (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 1,300 tires for the first quarter and expected to increase by 150 tires per quarter. Cash sales are expected to be 20% of total sales, with the remaining 80% of sales on account. b. Finished Goods Inventory on December 31, 2018 consists of 500 tires at $30 each. C. Desired ending Finished Goods Inventory is 20% of the next quarter's sales; first quarter sales for 2020 are expected be 1,900 tires. FIFO inventory costing method is used. d. Raw Materials Inventory on December 31, 2018, consists of 1,000 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 $9.50 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, 2019 is 1,000 pounds; indirect materials are insignificant and not considered for budgeting purposes. g. Each tire requires 0.50 hours of direct labor, direct labor costs average $25 per hour. h. Variable manufacturing overhead is $2 per tire. i. Fixed manufacturing overhead includes $3,000 per quarter in depreciation and $26,900 per quarter for other costs, such as utilities, insurance, and property taxes. j. Fixed selling and administrative expenses include $9,000 per quarter for salaries; $4,800 per quarter for rent: $1,200 per quarter for insurance; and $1,000 per quarter for depreciation. k. Variable selling and administrative expenses include supplies at 2% of sales. 1. Capital expenditures include $20,000 for new manufacturing equipment, to be purchased and paid in the first quarter I. Capital expenditures include $20,000 for new manufacturing equipment, to be purchased and paid in the first quarter. m. Cash receipts for sales on account are 60% in the quarter of the sale and 40% 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 60% in the quarter purchased and 40% in the following quarter; December 31, 2018, Accounts Payable is paid in the first quarter of 2019. o. Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred. p. Income tax expense is projected at $3,500 per quarter and is paid in the quarter incurred. 4. Grayson desires to maintain a minimum cash balance of $60,000 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. Requirement 1. Prepare Gessing's operating budget and cash budget for 2019 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, cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar. Se Qu Requirement 2. Prepare Gessing'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. Co inom far 2010 The income totomont amante