Using Hitchen's info from the income statement budgets (part 1), the remaining account info is presented to prepare the components of the balance sheet budgets. Assume the same budget is expected for the next three months (July, Aug, Sept).

1. Opening July 1 cash balance is $600,275.

2. A/R beginning balance of $2,100,250 was 67% collected in July and the remaining in August.

3. Sales: 30% collected in month of sale, 50% the following month, and 20% in the third month.

4. A/P opening balance of $292,000 was paid 70% this month and 30% next month.

5. Direct Materials are paid 30% during month of purchase, 50% the following month, and 20% the third month.

6. W/P had an opening balance of $210,000 and paid off this month

7. Direct Labor is paid 74% this month and the remaining in the following month.

8. Factory Overhead & Selling/Admin is paid 100% this month (excluding Depreciation)

9. Dividends are expected to be paid of $173,300, $240,000, and $260,000 in the three months respectively

10. Plans are in place to purchase a piece of equipment for $155,000 in month 1 (10% paid this month, 40% paid in month 2 and the remaining 50% in month 3).

a. Retired Asset expected to sell for $15,000 and collected 100% in the second month.

11. 100% of income tax is paid each month

12. Beginning balances:

a. Equipment = 2,164,000

b. Accum. Dep. Equipment = 1,256,000

c. Common Stock = $2,500,000

d. Retained Earnings = $959,205

Prepare these following budgets for month one, two and three.

1. Schedule of cash collections from customers

2. Schedule of cash payments for D.M.

3. Schedule of cash payments for D.L.

4. Cash Budget

5. Budgeted balance sheet (as of month 1)

Answer rating: 100% (QA)

Month 1 July Beginning AR 2100250 67 collected in July 140371441 Sales assumed same as June for pattern Sales assumed same as June for pattern 30 collected in July 13 of our sales in June accounted fo... View the full answer