Shortly before the end of 20x8, the management of Chain Corporation prepared the fol lowing budgeted...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Shortly before the end of 20x8, the management of Chain Corporation prepared the fol lowing budgeted balance sheet for December 31, 8: Cash Accounts receivable Inventory Total current assets. Equipment Accumulated amortization CHAIN CORPORATION Budgeted Balance Sheet As of December 31, 20x8 Total Accounts payable Loan from bank Taxes payable (due March 15, 10x9) Total liabilities Common shares Retained earnings (deficit) Total shareholders' equity Total $1,200,000 120,000 January February $300,000 20,000 200,000 March April 1,500,000 (200,000) 160,000 400,000 180,000 740.000 1,080,000 $1,820.000 In anticipation of preparing a master budget for January, February, and March 20×9, man- gement has gathered the following information: 30,000 units 24,000 40,000 50,000 $ 520,000 . Chain Corporation's single product is purchased for $10 per unit and resold for $24 per unit. The expected inventory level on December 31 (18,000 units) is greater than man- agement's desired level for 20x9 of 40% of the next month's expected sales (in units). Budgeted sales are: 1,300,000 $1,820,000 b. Cash sales are 40% of total sales and credit sales are 60% of total sales. Of the credit sales, 70% are collected in the first month after the sale and 30% in the second month after the sale. Seventy percent of the December 31, tox, balance of accounts receiv able will be collected during January and 30% will be collected during February. c. Merchandise purchased by the company is paid for as follows: 80% in the month after purchase, and 20% in the second month after purchase. Eighty percent of the Accounts Payable balance on December 31, x8, will be paid during January, and 20% will be paid during February. d. Sales commissions of 10% of sales are paid each month. Additional sales salaries are $288,000 per year. e. General and administrative salaries are $336,000 per year. Repair expenses equal $6,000 per month and are paid in cash. f. The equipment shown in the December 31, x 8, balance sheet was purchased in January 20 x8. It is being amortized over 10 years under the straight-line method with no salvage value. The following new purchases of equipment are planned in the com- ing quarter: January February March $240,000 $120.000 96,000 This equipment will also be amortized with the straight-line method over 10 years, with no salvage value. A full month's amortization is taken for the month in which the equip- ment is purchased. g. The company plans to acquire some land at the end of March at a cost of $232,000. The purchase price will be paid with cash on the last day of the month. h. Chain Corporation has a working arrangement with the bank to obtain additional loans as needed. The interest rate is 12% per year, and the interest is paid at the end of each month based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. Chain Corporation has agreed to maintain a mini- mum ending cash balance of $160,000 in every month. i. The income tax rate applicable to the company is 30%. However, income taxes on the first quarter's income will not be paid until April 15. Required Prepare a master budget for the first quarter of 2x 9. It should include the following com- ponent budgets: 1. Monthly sales budgets (showing both budgeted unit sales and dollar sales) 2. Monthly merchandise purchases budgets 3. Monthly selling expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets 6. Monthly cash budgets TER 7. Budgeted income statement for the first quarter 8. Budgeted balance sheet as of March 31,20x9 Provide as many supplemental schedules as you need. Round all amounts to the nearest dollar. Shortly before the end of 20x8, the management of Chain Corporation prepared the fol lowing budgeted balance sheet for December 31, 8: Cash Accounts receivable Inventory Total current assets. Equipment Accumulated amortization CHAIN CORPORATION Budgeted Balance Sheet As of December 31, 20x8 Total Accounts payable Loan from bank Taxes payable (due March 15, 10x9) Total liabilities Common shares Retained earnings (deficit) Total shareholders' equity Total $1,200,000 120,000 January February $300,000 20,000 200,000 March April 1,500,000 (200,000) 160,000 400,000 180,000 740.000 1,080,000 $1,820.000 In anticipation of preparing a master budget for January, February, and March 20×9, man- gement has gathered the following information: 30,000 units 24,000 40,000 50,000 $ 520,000 . Chain Corporation's single product is purchased for $10 per unit and resold for $24 per unit. The expected inventory level on December 31 (18,000 units) is greater than man- agement's desired level for 20x9 of 40% of the next month's expected sales (in units). Budgeted sales are: 1,300,000 $1,820,000 b. Cash sales are 40% of total sales and credit sales are 60% of total sales. Of the credit sales, 70% are collected in the first month after the sale and 30% in the second month after the sale. Seventy percent of the December 31, tox, balance of accounts receiv able will be collected during January and 30% will be collected during February. c. Merchandise purchased by the company is paid for as follows: 80% in the month after purchase, and 20% in the second month after purchase. Eighty percent of the Accounts Payable balance on December 31, x8, will be paid during January, and 20% will be paid during February. d. Sales commissions of 10% of sales are paid each month. Additional sales salaries are $288,000 per year. e. General and administrative salaries are $336,000 per year. Repair expenses equal $6,000 per month and are paid in cash. f. The equipment shown in the December 31, x 8, balance sheet was purchased in January 20 x8. It is being amortized over 10 years under the straight-line method with no salvage value. The following new purchases of equipment are planned in the com- ing quarter: January February March $240,000 $120.000 96,000 This equipment will also be amortized with the straight-line method over 10 years, with no salvage value. A full month's amortization is taken for the month in which the equip- ment is purchased. g. The company plans to acquire some land at the end of March at a cost of $232,000. The purchase price will be paid with cash on the last day of the month. h. Chain Corporation has a working arrangement with the bank to obtain additional loans as needed. The interest rate is 12% per year, and the interest is paid at the end of each month based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. Chain Corporation has agreed to maintain a mini- mum ending cash balance of $160,000 in every month. i. The income tax rate applicable to the company is 30%. However, income taxes on the first quarter's income will not be paid until April 15. Required Prepare a master budget for the first quarter of 2x 9. It should include the following com- ponent budgets: 1. Monthly sales budgets (showing both budgeted unit sales and dollar sales) 2. Monthly merchandise purchases budgets 3. Monthly selling expense budgets 4. Monthly general and administrative expense budgets 5. Monthly capital expenditures budgets 6. Monthly cash budgets TER 7. Budgeted income statement for the first quarter 8. Budgeted balance sheet as of March 31,20x9 Provide as many supplemental schedules as you need. Round all amounts to the nearest dollar.
Expert Answer:
Answer rating: 100% (QA)
1 Monthly Sales Budget January Units 30000 Dollar Sales 720000 February Units 24000 Dollar Sales 576000 March Units 40000 Dollar Sales 960000 April Un... View the full answer
Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these accounting questions
-
The following condensed balance sheet for December 31, 2017, comes from the records of Buzz and Associates: Buzz and Associates is considering the purchase of a new piece of equipment for $30,000....
-
The following condensed balance sheet for December 31, 2015, comes from the records of Buzz and Associates: Buzz and Associates is considering the purchase of a new piece of equipment for $30,000....
-
The following condensed balance sheet for December 31, 2012, comes from the records of Buzz and Associates: Buzz and Associates is considering the purchase of a new piece of equipment for $30,000....
-
Information sent electronically over the Internet affords little privacy. One of the reasons that cryptography is included in this text is because its importance is growing due to the increasing need...
-
Identify the unique accounting issues associated with consolidating a foreign subsidiary with the operations of its U.S. parent company.
-
Roles define the manager. Do you agree or disagree with this statement? Discuss what you think managers do.
-
1. What common factor might explain the high price paid for drinks on trains or at pop concerns and the high price paid by supporters to watch top football clubs? 2. A football club is newly promoted...
-
GAAP requires the statement of cash flows be presented when financial statements are prepared. (a) Explain the purposes of the statement of cash flows. (b) List and describe the three categories of...
-
In each arithmetic expression write on the line to the right what the result will be when evaluating it. Suppose A and B are integer variables with values of 3 and 10 respectively.
-
As the manager of Margarita Mexican Restaurant, you must deal with a variety of business transactions. Provide an explanation for the following transactions: a. Debit Equipment and credit Cash. b....
-
Consider the areas below as you address these questions. Condense the key information in a solid paragraphs focusing on the specific information pertaining to your NAB (Non Alcoholic Beverage)...
-
2.1 Consider the following matrix 2 -61 0 A = 2.1.1 Show that |A| = |A'|. (3) 2.1.2 Let A be an m x n matrix and A be any c-inverse of A. Suppose that a solution exists to the system Ax = g. Prove...
-
Briefly define whistleblower. explain (a) the purpose and (b) the likely content, for a whistleblower protections section in a code of ethics?
-
Does the Fourth Amendment provide any protection for employees of a private companies as to the actions of an employer with respect to searches of employees and/or their personal belongings or their...
-
CALCULATE THE NET PRESENT VALUE FOR THE FOLLOWING: Purchased equipment for $1,000,000 The equipment will produce $175,000 in cash from sales for each of the next 8 years. The equipment costs $10,000...
-
Silicon Chip Company's fiscal year-end is December 31. At the end of 2018, it owed employees $24,000 in salaries and wages that will be paid on January 7, 2019. Required: 1. Prepare an adjusting...
-
anson Pharmaceuticals incurred the following costs in 2018 related to a new cancer drug: Investigation of new formulas ps 2.495.000 Development of a new formula. 1,670,000 Legal and patent filing...
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
Use the McDonald data from Problem P14-41B. P14-41B Requirements 1. Prepare the 2016 statement of cash flows by the direct method. 2. How will what you learned in this problem help you evaluate an...
-
Austin Acoustics recorded the following transactions during October 2016: a. Received $2,500 cash from customer for three months of service beginning October 1, 2016, and ending December 31, 2016....
-
Krisp Architects recorded the following adjusting entries as of December 31: a. Service Revenue accrued, $2,600. b. Unearned Revenue that has been earned, $400. c. Office Supplies on hand, $675. The...
-
Assume a stock is priced at $100; calculate its intrinsic value based on the Gordon growth DDM, with the following assumptions: D0 = $3, g = 6 percent, and k = 10 percent. Indicate whether investors...
-
Suppose Borg Corporation was operating at 88 percent of capacity. What would sales be at full capacity? What is the EFN in this case? What is the capital intensity ratio at full capacity?
-
The simplest sequential description of the Ewens sampling formula is called the Chinese restaurant process. The first customer arrives and is seated at a table. After \(n\) customers have been...
Study smarter with the SolutionInn App