The management of Zigby Manufacturing prepared the following balance sheet for March 31. Assets ZIGBY MANUFACTURING Balance Sheet March 311 $ 65,000 Liabilities and Equity Cash Liabilities Accounts receivable: 399,000 Accounts payable $204,500 Raw materials inventory 90,200 Loan payable 27,000 Finished goods inventory 308,028 Long-term note payable 500,000 $ 731,500 Equipment Less: Accumulated depreciation $630,000 165,000 Equity 465,000 Common stock 350,000 Retained earnings 245,728 595,728 Total assets $1,327,228 Total liabilities and equity $ 1,327,228 To prepare a master budget for April, May, and June, management gathers the following information. a. Sales for March total 22,800 units. Budgeted sales in units follow: April, 22,800; May, 16,000; June, 23,000; and July, 22,800. The product's selling price is $25.00 per unit and its total product cost is $19.30 per unit. b. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month's ending materials inventory to equal 50% of the next month's direct materials requirements. The March 31 raw materials inventory is 4,510 pounds. The budgeted June 30 ending raw materials inventory is 5,500 pounds. Each finished unit requires 0.50 pound of direct materials. c. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's budgeted unit sales. The March 31 finished goods inventory is 15,960 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $11 per hour. e. The predetermined variable overhead rate is $4.20 per direct labor hour. Depreciation of $35,020 per month is the only fixed factory overhead item. f. Sales commissions of 10% of sales are paid in the month of the sales. The salds manager's monthly salary is $4,500. g. Monthly general and administrative expenses include $27,000 for administrative salaries and 0.6% monthly interest on the long- term note payable. h. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). i. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase).. J. The minimum ending cash balance for all months is $65,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary < Prev 4 of 4 Next c. Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's budgeted unit sales. The March 31 finished goods inventory is 15,960 units. d. Each finished unit requires 0.50 hour of direct labor at a rate of $11 per hour. e. The predetermined variable overhead rate is $4.20 per direct labor hour. Depreciation of $35,020 per month is the only fixed factory overhead item. f. Sales commissions of 10% of sales are paid in the month of the sales. The sales manager's monthly salary is $4,500. g. Monthly general and administrative expenses include $27,000 for administrative salaries and 0.6% monthly interest on the long- term note payable. h. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). i. All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). j. The minimum ending cash balance for all months is $65,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans. k. Dividends of $25,000 are budgeted to be declared and paid in May. 1. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter. m. Equipment purchases of $100,000 are budgeted for the last day of June. Required: Prepare the following budgets for the months of April, May, and June: 1. Sales budget. 2. Production budget. 3. Direct materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. 11. Budgeted income statement for entire second quarter (not monthly). 12. Budgeted balance sheet at June 30. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Req 12 8. Schedule of cash receipts. 9. Schedule of cash payments for direct materials. 10. Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Sales Cash receipts from Cash sales Collections of prior period sales Total cash receipts ZIBGY MANUFACTURING Schedule of Cash Receipts April May June $ 570,000 $ 400,000 $ 575,000 171,000 120,000 172,500 $ 171,000 $ 120,000 $ 172,500 Schedule of Cash Payments for Direct Materials Materials purchases Cash payments for Current period purchases Prior period purchases Total cash payments Beginning cash balance - Add: Cash receipts from sales April May June $ 194,700 $ 218,800 $ 224,300 $ 0 $ 0 $ 0 Cash Budget April $ May 65,000 $174,626 $ June 240,586 Show less A Beginning cash balance Add: Cash receipts from sales Total cash available Less: Cash payments for: Direct material Direct labor Variable overhead General and administrative salaries Sales commissions Sales salaries Loan interest Dividends Purchases of equipment Long-term note interest Total cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance Loan balance- Beginning of month Additional loan (loan repayment) Loan balance - End of month Cash Budget April May $ 65,000 $ 174,626 $ 0 June 240,586 Loan balance April May June 0 Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6 Req 7 Req 8 to 10 Req 11 Budgeted income statement for entire second quarter (not monthly). (Round your final answers to the nearest ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30 Sales Cost of goods sold Gross profit Selling, general and administrative expenses $ 1,545,000 1,192,740 352,260 Sales commissions expense Sales salaries expense General administrative salaries expense Long-term note interest expense Loan interest expense Total operating expenses Income before taxes Net income < Req 8 to 10 352,260 $ 352,260 Req 12 >