Question
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019. ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash $
The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019.
ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 | |||||||
Assets | |||||||
Cash | $ | 59,000 | |||||
Accounts receivable | 487,500 | ||||||
Raw materials inventory | 93,010 | ||||||
Finished goods inventory | 433,000 | ||||||
Total current assets | 1,072,510 | ||||||
Equipment | 638,000 | ||||||
Accumulated depreciation | (169,000 | ) | |||||
Equipment, net | 469,000 | ||||||
Total assets | $ | 1,541,510 | |||||
Liabilities and Equity | |||||||
Accounts payable | $ | 215,410 | |||||
Short-term notes payable | 31,000 | ||||||
Total current liabilities | 246,410 | ||||||
Long-term note payable | 530,000 | ||||||
Total liabilities | 776,410 | ||||||
Common stock | 354,000 | ||||||
Retained earnings | 411,100 | ||||||
Total stockholders equity | 765,100 | ||||||
Total liabilities and equity | $ | 1,541,510 | |||||
To prepare a master budget for April, May, and June of 2019, management gathers the following information.
- The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).
- All raw materials purchases are on credit, and no payables arise from any other transactions. One months raw materials purchases are fully paid in the next month.
- The minimum ending cash balance for all months is $98,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
- Dividends of $29,000 are to be declared and paid in May.
- No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter.
- Equipment purchases of $149,000 are budgeted for the last day of June.
Required: Prepare the following budgets and other financial information as required. All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below. (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar.):
Cash budget. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)
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