Tuscan Toy Company
Balance Sheet
31-Dec-18
Assets
Current Assets:
Cash
$35,000
Accounts Receivable
50,000
Raw Materials Inventory
1,400
Finished Goods Inventory
11,900
The Tuscan Toy Company manufactures toy building block sets for children. Tuscan is planning for 2019 by developing a master budget by quarters. Tuscan's balance sheet for December 31,2018 follows:
Total Current Assets
$98,300
Property, Plant, and Equipment:
Equipment
194,000
Less: Accumulated Depreciation
-32,000
162,000
Total Assets
$260,300
Liabilities
Current Liabilities:
Accounts Payable
$12,000
Stockholders' Equity
Common Stock, no par
$100,000
Retained Earnings
148,300
Total Stockholders' Equity
248,300
Total Liabilities and Stockholders' Equity
$260,300
Other budget data for Tuscan Toy Company:
A.	Budgeted sales are 1,000 sets for the first quarter and expected to increase by 50 set per quarter. Cash sales are expected to be 30% of total sales, with the remaining 70% of sales on account. Sets are budgeted to sell for $70 per set.
B.	Finished Goods Inventory on December 31,2018, consists of 350 sets at $34 each.
C.	Desired ending Finished Goods Inventory is 30% of the next quarter's sales; first quarter sales for 2020 are expected to be 1,200 sets. FIFO inventory costing method is used.
D.	Raw Materials Inventory on December 31,2018, consists of 1,400 pounds. Direct materials requirement is 4 pounds per set. The cost is $1 per pound.
E.	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 1,400 pounds; indirect materials are insignificant and not considered for budgeting purposes.
F.	Each set requires 0.40 house of direct labor; direct labor costs average $14 per hour.
G.	Variable manufacturing overhead is $5.60 per set.
H.	Fixed manufacturing overhead includes $6,000 per quarter in depreciation and $3,051 per quarter for other costs, such as utilities, insurance, and property taxes.
I.	Fixed selling and administrative expenses include$8,500 per quarter for salaries; $3,000 per quarter for rent; $1,500 per quarter for insurance; and $1,500 per quarter for depreciation
J.	Variable selling and administrative expenses include supplies at 2% of sales.
K.	Capital expenditures include $35,000 for new manufacturing equipment, to be purchased and paid for in the first quarter.
L.	Cash receipts for sales on account are 70% in the quarter of the sale and 30% in the quarter following the sale; Accounts Receivable balance on December 31, 2018, is expected to be received in the first quarter of 2019; uncollectible accounts are considered insignificant and not considered for budgeting purposes.
M.	Direct materials purchases are paid 80% in the quarter purchased and 20% in the following quarter; Accounts Payable balance on December 31, 2018, is expected to be paid in the first quarter of 2019.
N.	Direct labor, manufacturing overhead, and selling and administrative costs are paid in the quarter incurred.
O.	Income tax expense is projected at $3,000 per quarter and is paid in the quarter incurred.
P.	Tuscan desires to maintain a minimum cash balance of $20,000 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 is4% per year and paid at the beginning of the quarter based on the amount outstanding from the previous quarter.
Requirements
1	Prepare Tuscan'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, schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar.
2	Prepare Tuscan's annual financial budget for 2019, including budgeted income statement, budgeted balance sheet, and budgeted statement of cash flows.