What does Opening TB mean?

The newly hired business manager/accountant prepared the following income statement for the quarter ended June 30, 2020: J & R's Outdoor Furniture Manufacturers Income Statement For the Second Quarter Ended June 30, 2020 Sales Revenue (2,500 sets @ $900) $2,250,000 Operating Expenses Raw Material Purchases Advertising Indirect labor Direct Labor Selling and Adm. Salaries Utilities expense Rent-Factory Building Insurance expense Depreciation-Factory equipment Depreciation-Sales equipment $792,000 270,000 84,000 570,000 225,000 58,000 250,000 45,000 91,000 135,000 Total Sell/Admin Expenses 2,520,000 Net Income (Loss) ($270,000) Royce is greatly disturbed by these reported results. The company had been reporting profit in prior quarters. Consequently, he and Joyce agreed to retain you as a consultant and have asked you to review the income statement and recommend any needed corrections and adjustments. You talked with the administrative staff and obtained the following additional data: A. Inventory Data April 1 June 30 Raw Material Work-in-Progress Finished Goods $48,000 72,000 90,000 $153,000 84,000 144,000 B. Fifty percent (50%) of the utility expense and sixty-six and two-thirds percent (66 2/3%) of the insurance expense are to be applied to the factory. The remaining amounts are to be considered selling and administrative expenses. 1. A detailed schedule of cost of goods sold for the quarter ended June 30, 2020. 2. A corrected multi-step income statement for the quarter ended June 30, 2020. (See format in Exhibit #1) Joyce advised Royce that there is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the company had not prepared a cash budget for several quarters and (2) is not up to date on its payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Royce provided projections pertaining to the 2nd quarter (April through June 2020) and other information outlined below: 1. Total sales 2nd quarter: 2,500 3-piece set: Sales price is $900/3-piece set 2. Total Sales for the 3rd quarter are projected to increase 8.5% above the 2nd quarter total sales due to an aggressive marketing program that began June 1, 2020. Total quarter sales per month are expected to be realized as follows: 40% in July, 35% in August, and 25% in September. The sales budgets expressed in sales dollars and in the number of furniture sets sold are as follows: PROJECTED July August September TOTAL QTR SALES REVENUE SALES 8.5% increase) $610,313 $854,438 $976,500 $2,441,250 SALES: PRICE X QUANTITY $610,313 $854,438 $976,500 $2,441,250 Number of Furniture Sets Sold July August September TOTAL QTR Number of Furniture Sets Sold 678 949 1,085 2,713 5. Cost Classifications based on 2nd quarter 2020 information: Costs Fixed Costs Variable Costs Raw Materials used in Manufacturing (See corrected COGS Schedule in Part 1, Required #1) $ ? $ 250,000 Actual 2nd Quarter Income Statement Direct Labor 570,000 Overhead: Rent-Factory Indirect Labor 84,000 Insurance - Factory (66 2/3%) Utility-Factory (50%) 20,000 Depreciation-factory building 30,000 9,000 91,000 General Administrative Advertising Selling & Administrative Wages and Salaries Utility-Selling & Administrative (50%) Insurance-Administrative (33 2/3%) Depreciation-Administrative 90,000 20,000 270,000 135,000 9,000 15,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material purchases are paid as follows: 60% in the month of the purchase, 20% the month after the purchase, and 20% in the second month following the purchase. The raw materials' budget is as follows: July August September TOTAL QTR PROJECTED RAW MATERIAL PURCHASES $745,395 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES $186,349 46,587 (153,000) $79,936 $260,888 65,222 (46,587) $279,523 $298,158 74,540 (65,222) $307,475 $666,935 9. Additional monthly obligation paid in cash include: a. Property taxes, due August 31, $2,950. b. Employee payroll taxes due September 30, $3,000, You have determined that you are going to provide the following information to Joyce and Royce: a. Compute the unit cost of goods sold using 2nd quarter information and the corrected cost of goods sold statement you prepared in Part One b. Prepare a projected traditional multi-step income statement for the 3rd quarter using information in "a" above and the 2nd quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. C. Prepare a schedule projected cash collections from credit sales for each month of the 3rd quarter. Relevant prior months' credit sales: May credit sales, $368,720 June credit sales, $331,840 d. Prepare a schedule of projected cash payments for raw materials for each month of the 3 quarter. Relevant prior months' credit (on account) purchases: May purchases on account, $344,100 June purchases on account, $309,720 e. Prepare a projected cash budget for the total 3rd quarter. Your budget should include a monthly budget for each of the three months in the quarter. The cash balance on July 1, 2020 is $1,270,000, EXHIBIT #1: Sales Cost of Goods Sold Gross Profit Selling and Administrative: Advertising Selling/Admin. Salaries Utility-Adm Insurance Depreciation- Admin. Total Sell/Admin Expenses Net Income (Loss) The newly hired business manager/accountant prepared the following income statement for the quarter ended June 30, 2020: J & R's Outdoor Furniture Manufacturers Income Statement For the Second Quarter Ended June 30, 2020 Sales Revenue (2,500 sets @ $900) $2,250,000 Operating Expenses Raw Material Purchases Advertising Indirect labor Direct Labor Selling and Adm. Salaries Utilities expense Rent-Factory Building Insurance expense Depreciation-Factory equipment Depreciation-Sales equipment $792,000 270,000 84,000 570,000 225,000 58,000 250,000 45,000 91,000 135,000 Total Sell/Admin Expenses 2,520,000 Net Income (Loss) ($270,000) Royce is greatly disturbed by these reported results. The company had been reporting profit in prior quarters. Consequently, he and Joyce agreed to retain you as a consultant and have asked you to review the income statement and recommend any needed corrections and adjustments. You talked with the administrative staff and obtained the following additional data: A. Inventory Data April 1 June 30 Raw Material Work-in-Progress Finished Goods $48,000 72,000 90,000 $153,000 84,000 144,000 B. Fifty percent (50%) of the utility expense and sixty-six and two-thirds percent (66 2/3%) of the insurance expense are to be applied to the factory. The remaining amounts are to be considered selling and administrative expenses. 1. A detailed schedule of cost of goods sold for the quarter ended June 30, 2020. 2. A corrected multi-step income statement for the quarter ended June 30, 2020. (See format in Exhibit #1) Joyce advised Royce that there is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the company had not prepared a cash budget for several quarters and (2) is not up to date on its payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Royce provided projections pertaining to the 2nd quarter (April through June 2020) and other information outlined below: 1. Total sales 2nd quarter: 2,500 3-piece set: Sales price is $900/3-piece set 2. Total Sales for the 3rd quarter are projected to increase 8.5% above the 2nd quarter total sales due to an aggressive marketing program that began June 1, 2020. Total quarter sales per month are expected to be realized as follows: 40% in July, 35% in August, and 25% in September. The sales budgets expressed in sales dollars and in the number of furniture sets sold are as follows: PROJECTED July August September TOTAL QTR SALES REVENUE SALES 8.5% increase) $610,313 $854,438 $976,500 $2,441,250 SALES: PRICE X QUANTITY $610,313 $854,438 $976,500 $2,441,250 Number of Furniture Sets Sold July August September TOTAL QTR Number of Furniture Sets Sold 678 949 1,085 2,713 5. Cost Classifications based on 2nd quarter 2020 information: Costs Fixed Costs Variable Costs Raw Materials used in Manufacturing (See corrected COGS Schedule in Part 1, Required #1) $ ? $ 250,000 Actual 2nd Quarter Income Statement Direct Labor 570,000 Overhead: Rent-Factory Indirect Labor 84,000 Insurance - Factory (66 2/3%) Utility-Factory (50%) 20,000 Depreciation-factory building 30,000 9,000 91,000 General Administrative Advertising Selling & Administrative Wages and Salaries Utility-Selling & Administrative (50%) Insurance-Administrative (33 2/3%) Depreciation-Administrative 90,000 20,000 270,000 135,000 9,000 15,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material purchases are paid as follows: 60% in the month of the purchase, 20% the month after the purchase, and 20% in the second month following the purchase. The raw materials' budget is as follows: July August September TOTAL QTR PROJECTED RAW MATERIAL PURCHASES $745,395 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES $186,349 46,587 (153,000) $79,936 $260,888 65,222 (46,587) $279,523 $298,158 74,540 (65,222) $307,475 $666,935 9. Additional monthly obligation paid in cash include: a. Property taxes, due August 31, $2,950. b. Employee payroll taxes due September 30, $3,000, You have determined that you are going to provide the following information to Joyce and Royce: a. Compute the unit cost of goods sold using 2nd quarter information and the corrected cost of goods sold statement you prepared in Part One b. Prepare a projected traditional multi-step income statement for the 3rd quarter using information in "a" above and the 2nd quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. C. Prepare a schedule projected cash collections from credit sales for each month of the 3rd quarter. Relevant prior months' credit sales: May credit sales, $368,720 June credit sales, $331,840 d. Prepare a schedule of projected cash payments for raw materials for each month of the 3 quarter. Relevant prior months' credit (on account) purchases: May purchases on account, $344,100 June purchases on account, $309,720 e. Prepare a projected cash budget for the total 3rd quarter. Your budget should include a monthly budget for each of the three months in the quarter. The cash balance on July 1, 2020 is $1,270,000, EXHIBIT #1: Sales Cost of Goods Sold Gross Profit Selling and Administrative: Advertising Selling/Admin. Salaries Utility-Adm Insurance Depreciation- Admin. Total Sell/Admin Expenses Net Income (Loss)