Refer to the information in Problem 6-42.
Budgeted balances at January 31, 2021, are as follows:

Selected budget information for December 2020 follows:

Customer invoices are payable within 30 days. From past experience, Skulas’s accountant projects 40% of invoices will be collected in the month invoiced, and 60% will be collected in the following month.

Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with 50% of direct materials purchases paid during the month of the purchase, and 50% paid in the month following purchase.

Fixed manufacturing overhead costs include $64,000 of depreciation costs and fixed operating (nonmanufacturing) overhead costs include $10,000 of depreciation costs. Direct manufacturing labor and the remaining manufacturing and operating (nonmanufacturing) overhead costs are paid monthly.

All property, plant, and equipment acquired during January 2021 were purchased on credit and did not entail any outflow of cash.

There were no borrowings or repayments with respect to long-term liabilities in January 2021.

On December 15, 2020, Skulas’s board of directors voted to pay a $160,000 dividend to stockholders on January 31, 2021.

Required

On December 15, 2020, Skulas’s board of directors voted to pay a $160,000 dividend to stockholders on January 31, 2021.
1. Prepare a cash budget for January 2021. Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and operating (nonmanufacturing) overhead.
2. Skulas is interested in maintaining a minimum cash balance of $120,000 at the end of each month. Will Skulas be in a position to pay the $160,000 dividend on January 31?
3. Why do Skulas’s managers prepare a cash budget in addition to the revenue, expenses, and operating income budget?
4. Prepare a budgeted balance sheet for January 31, 2021, by calculating the January 31, 2021, balances in (a) cash, (b) accounts receivable, (c) inventory, (d) accounts payable, and (e) plugging in the balance for stockholders’ equity.

Data From Problem 6-42

Skulas’s CEO expects to sell 2,900 snowboards during January 2021 at an estimated retail price of $650 per board. Further, the CEO expects a 2021 beginning inventory of 500 snowboards and would like to end January 2021 with 200 snowboards in stock.

Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed manufacturing overhead costs budgeted for January 2021. Skulas combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $250 per sales visit. The marketing plan calls for 38 sales visits during January 2021. Finally, there are $35,000 in fixed operating (nonmanufacturing) costs budgeted for January 2021.

Other data include the following:

The inventor able unit cost for ending finished-goods inventory on December 31, 2020, is $374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.

Transcribed Image Text:

Cash Accounts receivable Inventory Property, plant and equipment (net) Accounts payable Long-term liabilities Stockholders' equity ? ? ? $1,175,600 ? 182,000 ?