The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019. ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity $ 54,000 354,375 100,495 333,000 841, 870 628,000 (164,000) 464,000 $1,305,870 $ 212,195 26,000 238, 195 514,000 752,195 349,000 204,675 553, 675 $ 1,305,870 To prepare a master budget for April, May, and June of 2019, management gathers the following information. a. Sales for March total 22,500 units. Forecasted sales in units are as follows: April, 22,500; May, 19,500; June, 21,700; and July, 22,500. Sales of 254,000 units are forecasted for the entire year. The product's selling price is $22.50 per unit and its total product cost is $18.50 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements. The March 31 raw materials inventory is 5,025 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,400 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials. c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods inventory is 18,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $10 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,790 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 6% of sales and are paid in the month of the sales. The sales manager's monthly salary is $4,400. g. Monthly general and administrative expenses include $26,000 administrative salaries and 0.5% monthly interest on the long-term note payable. h. The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale). i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month. j. The minimum ending cash balance for all months is $54,000. 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. k. Dividends of $24,000 are to be declared and paid in May. 1. 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. m. Equipment purchases of $144,000 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.): 1. Sales budget. 2. Production budget. 3. Raw materials budget. 4. Direct labor budget. 5. Factory overhead budget. 6. Selling expense budget. 7. General and administrative expense budget. 8. Cash budget. 9. Budgeted income statement for the entire second quarter (not for each month separately). 10. Budgeted balance sheet. Calculation of Cash receipts from customers: Total budgeted sales Cash sales Sales on credit April May June $ 151,875 $ 131,625 $ 146,475 X 354,375 X 307,125 X 341,775 X $ 506,250 $ 92,138 $ 102,533 30% 70% Current month's cash sales Collections of receivables Total cash receipts Total cash receipts from customers April May $ 151,875 $ 131,625 354,375 354,375 $ 506,250 $ 486,000 June $ 146,475 307,125 $ 453,600 ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May June $ 54,000 $ Beginning cash balance Cash receipts from customers Total cash available 506,250 560,250 116,745$ $ 162,767 486,000 453,600 602,745 616,367 Cash payments for: Raw materials Direct labor Variable overhead Sales commissions Sales salaries General & administrative salaries Dividends 212,195 100,500 41,205 30,375 4,400 206,800 106,300 43,583 26,325 4,400 OOOOOO OOOOOOOOOO 218,000 111,700 45,797 29,295 4,400 OOOOooo 26,000 26,000 26,000 24,000 Loan interest Long-term note interest Purchases of equipment 260 2,570 2,570 2,570 144,000 Total cash payments 581,762 417,505 142,745 (26,000) 439,978 162,767 Preliminary cash balance Additional loan (loan repayment) Ending cash balance 34,605 $ 162,767 $ 34,605 Loan balance April May June Loan balance - Beginning of month $ 26,000 $ 0 Additional loan (loan repayment) (26,000) Loan balance - End of month $ 0 $ 0 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Budgeted income statement for the entire second quarter (not for each month separately). (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Income Statement For Three Months Ended June 30, 2019 Sales Cost of goods sold Gross profit $ 1,433,250 1,178,450 254,800 Operating expenses Sales commissions $ 85,995 Sales salaries 13,200 General administrative salaries 78,000 Bank loan interest expense 260 Long-term note interest 7,710 18,165 X Equipment Total operating expenses 203,330 Income before taxes 51,470 Income tax 27,854 Net income $ 23,616 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Budgeted balance sheet. (Round your final answers to the nearest whole dollar.) ZIGBY MANUFACTURING Budgeted Balance Sheet June 30, 2019 Assets Cash $ 54,000 Accounts receivable Raw materials inventory Finished goods inventory Total current assets 341,775 108,000 333,000 $ 836,775 Equipment $ 772.000 Accumulated depreciation (256,370) Equipment, net 515,630 $ 1,352,405 Total assets Liabilities and Equity Liabilities $ 219,700 Accounts payable Bank loan payable 19,395 Income taxes payable 27,854 Total current liabilities 266,949 Common stock x 349,000 Stockholders' Equity Retained earnings $ 222,456 x 571,456 Equipment Total Stockholders' Equity 793,912 S 1,409,861 Total Liabilities and Equity