Exercise 22-29 (10 minutes)
HECTOR COMPANY
Budgeted Cash Disbursements
For August and September
August Sept.
**Equals prior month’s purchases. Note that depreciation expense is excluded since it is
a non-cash expense.
Exercise 22-30 (25 minutes)
CASTOR, INC.
Cash Budget
For April, May, and June
April May June
Beginning cash balance*……………………….. $12,000 $12,000 $12,279
Cash receipts**………………..……………………. 28,000 36,000 32,000
Total cash available ……………………..……….. 40,000 48,000 44,279
Cash disbursements
Interest on bank loan
April ($2,000 x 1%)……………………………….
20
May ($6,060 x 1%)………………………………..
Preliminary cash balance …..…………….......
______
$7,940
61
$18,339
_______
$16,199
Additional loan from bank………..……………. 4,060
**Per cash receipts budget on next page
Exercise 22-30 (continued)
CASTOR, INC.
Cash Receipts Budget
For April, May, and June
April May June
Sales………………………………………..…………… $32,000 $40,000 $24,000
Less ending accts. receivable (50%).......... 16,000 20,000 12,000
Cash receipts from
Exercise 22-31 (30 minutes)
(1)
KELSEY
Cash Receipts Budget
For July, August, and September
July August Sept.
Sales………………………………………..…………… $64,000 $80,000 $48,000
Less ending accts. receivable (80%).......... 51,200 64,000 38,400
Cash receipts from
Exercise 22-31 (continued)
(2)
KELSEY
Cash Budget
For July, August, and September
July August Sept.
Cash disbursements
Payments for merchandise…………………….. 40,400 33,600 34,400
Sales commissions (10% of sales)............. 6,400 8,000 4,800
Office salaries………………………..………………
Rent…………………………………………………..…..
Interest on bank loan**
July (5,000 x 1%)………………………………….
4,000
6,500
50
4,000
6,500
4,000
6,500
*July’s beginning cash balance includes a loan payable of $5,000.
** Rounded to the nearest dollar. Answers vary slightly if rounded to the nearest cent.
Exercise 22-32 (15 minutes)
ZETROV COMPANY
Budgeted Balance Sheet
As of March 31
ASSETS
Equipment…………………………………………………………….. $84,000
Less accumulated depreciation (note 1) ….……............ 47,000 37,000
Total assets…………………………………………………………... $206,000
Stockholders’ equity
Common stock………………………………………….…..……. 25,000
Retained earnings (note 2) ……………………………………. 56,000 81,000
Total liabilities and equity…………….…………………..…… $206,000
Supporting calculations
Beginning……………………………………………………….….. $ 8,000
Net income………………………………………………..……..… 48,000
Ending………………………………………………….………..….. $56,000
Exercise 22-33 (15 minutes)
FORTUNE, INC.
Budgeted Income Statement
For Quarter Ended March 31
Operating expenses
Commissions expense (8% of sales)…………………….….$300,000
Rent expense ($14,000 x 3)………………………………………. 42,000
Advertising expense (15% of sales)………………………….. 562,500
Office salaries expense ($75,000 x 3)……………………….. 225,000
Net income…………………………………………………………….. $ 273,787
Supporting calculations
(1) Sales
Unit sales (45,000 + 55,000 + 50,000)………….. 150,000
Unit price…….………….………………………..….…... $25
Sales dollars…………………….….…..….…..….…... $3,750,000
(2) Cost of goods sold
* Rounded to the nearest dollar.
Exercise 22-34 (15 minutes)
RENDER CO. CPA
Activity-Based Budget
For Year Ending December 31, 2015
Budgeted
Hours
Budgeted
Price/hour
Budgeted
Cost
Data-entry…………………………………….……….. 2,200 $10 $ 22,000
Auditing………………………………..……..……….. 4,800 40 192,000
PROBLEM SET A
Problem 22-1A (40 minutes)
Part 1
BLACK DIAMOND COMPANY
Production Budget (in units)
Third Quarter
Budgeted ending inventory (skis)………………………………..…..………….. 3,500
Add budgeted sales…………………………………………………………………….. 150,000
Part 2
BLACK DIAMOND COMPANY
Direct Materials Budget (in lbs, except where noted)
Third Quarter
Materials (carbon fiber) needed for production (148,500 x 2)……... 297,000
Add budgeted ending inventory (carbon fiber)……………….…………. 4,000
Total materials (carbon fiber) requirements……………..………..……… 301,000
Problem 22-1A (concluded)
Part 3
BLACK DIAMOND COMPANY
Direct Labor Budget
Third Quarter
Units to be produced…………………………………………………..…. 148,500
Part 4
BLACK DIAMOND COMPANY
Factory Overhead Budget
Third Quarter
Total labor hours needed………………………….……………………. 74,250
Variable overhead rate per DL hour………………………………... x $8