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Problem 22-4A (Concluded)
Supporting Footnotes
Note C
Beginning receivables......................................................... $ 342,248
Note D
Beginning raw materials inventory.................................... $ 98,500
**30,000 units x $20 per unit
Note E
Beginning finished goods inventory................................. $ 325,540
Note F
Note G
Note H
Note I
ZIGBY MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended June 30, 2015
Retained earnings, beginning........................ $208,788
Problem 22-5A (60 minutes)
Part 1
KEGGLER’S SUPPLY
Merchandise Purchases Budgets
For March, April, and May
March April May
FOOTWEAR
Budgeted sales for next month...........................25,000 32,000 35,000
Ratio of ending inventory to future sales........... 30% 30% 30%
Budgeted ending inventory................................. 7,500 9,600 10,500
SPORTS EQUIPMENT
Budgeted sales for next month...........................90,000 95,000 90,000
Ratio of ending inventory to future sales........... 30% 30% 30%
APPAREL
Budgeted sales for next month...........................38,000 37,000 25,000
Ratio of ending inventory to future sales........... 30% 30% 30%
Problem 22-5A (Continued)
Part 2. Analysis Component
The factor that causes the first month’s purchases to be so much smaller is
the excess inventory that accumulated just prior to the budgeting period.
This overstocking factor could exist for a number of reasons, including:
There may have been some potentially disruptive factor (such as a
Competition among suppliers may have caused them to become more
Problem 22-6A (50 minutes)
ONEIDA COMPANY
Cash Budget
For September, October, and November
September October November
Beginning balance.........................................$ 5,000 $ 99,250 $ 69,500
Cash receipts
*** Interest at 12% on $100,000 for 3 months is $3,000.
Supporting schedules
Collections of credit sales* August September October November
Aug. sales ($215,000)—[25%: 45%: 20%: 9%]..................$ 53,750 $ 96,750 $ 43,000 $ 19,350
Payments on credit purchases** August September October November
Aug. purchases ($125,000)—(0%: 80%: 20%)..........................................$ 0 $100,000 $ 25,000 $ -
Problem 22-7A (70 minutes)
Part 1
Cash collections of credit sales (accounts receivable)
From sales in Total % Collected June July
April.............................................$ 720,000 28% $201,600
May.............................................. 360,000 50 180,000
Part 2
Budgeted ending inventories (in units)
April May June July
Next month’s budgeted sales..................... 2,000 6,000 5,000 3,800
Part 3
AZTEC COMPANY
Merchandise Purchases Budgets
For May, June, and July
May June July
Budgeted ending inventory (from part 2)............ 1,300 1,100 860
Add budgeted sales......................................... 2,000 6,000 5,000
Problem 22-7A (Continued)
Part 4
Cash payments on product purchases (for June and July)
From purchases in Total % Paid June July
May...............................................$308,000 40% $123,200
June..............................................638,000 60 382,800
Part 5
AZTEC COMPANY
Cash Budget
June and July
June July
Beginning cash balance............................................... $100,000 $100,000
Cash receipts from customers.................................... 597,600 820,800
Total available cash...................................................... 697,600 920,800
Cash disbursements
* Interest expense ** Loan balance
Problem 22-7A (Concluded)
Part 6
Information about the need for cash in the near future would be helpful to
the management of Aztec Company because they would be able to enter
In addition, a good cash budget is likely to be helpful to management in
negotiating the terms of the loan. In this situation, the company can tell the
Problem 22-8A (130 minutes)
Part 1
DIMSDALE SPORTS CO.
Sales Budgets
January, February, and March 2016
Budgeted
Units
Budgeted
Unit Price
Budgeted
Total Dollars
January 2016.......................................................7,000 $55 $ 385,000
Part 2
DIMSDALE SPORTS CO.
Merchandise Purchases Budgets
January, February, and March 2016
January February March Total
Next month’s budgeted sales............... 9,000 11,000 10,000
Ratio of inventory to future sales......... x 20% x 20% x 20%
Budgeted ending inventory.................. 1,800 2,200 2,000
Part 3
DIMSDALE SPORTS CO.
Selling Expense Budgets
January, February, and March 2016
January February March Total
Budgeted sales.....................................$385,000 $495,000 $605,000
Sales commission percent..................x 20% x 20% x 20%
