Problem 20-7A (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
…………………………………..…..
40
$255,200
July …………………………………….…..
523,600
60
________
314,160
Total paid ………………………………..
$506,000
$569,360
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
Payments on purchases ……………………………………...
506,000
569,360
Selling and administrative expenses …………………....
110,000
110,000
Interest expense* ………………………………………………...
250
437
Total disbursements …………………………………………...
616,250
679,797
Preliminary cash balance ……………………………………....
81,350
241,003
Additional loan from bank……………………………………...
18,650
0
Repayment of loan to bank …………………………………....
________
43,650
Ending cash balance ……………………………………………..
$100,000
$197,353
Ending loan balance** …………………………………………...
$ 43,650
$ 0
* Interest expense ** Loan balance
June = $25,000 x 12%/12 = $250 June = $25,000 + $18,650 = $43,650
July = $43,650 x 12%/12 = $437 (rounded) July = $43,650 – $43,650 = $0
Problem 20-7A (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
into negotiations with potential lenders well ahead of any immediate need
Problem 20-8A (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
February 2016 ……………………………………………….
9,000
55
495,000
March 2016 ……………………………………………….….
11,000
55
605,000
Total for the first quarter ……………………………….
27,000
$1,485,000
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
Add budgeted sales ………………………….
7,000
9,000
11,000
Required available merchandise ……….
8,800
11,200
13,000
Deduct beginning inventory ……………..
(5,000)
(1,800)
(2,200)
Units to be purchased ……………………...
3,800
9,400
10,800
24,000
Budgeted cost per unit ……………………..
$ 30
$ 30
$ 30
$ 30
Budgeted merchandise purchases …...
$114,000
$282,000
$324,000
$720,000
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%
Sales commissions expense ……………
77,000
99,000
121,000
$297,000
Sales salaries ……………………………..……
5,000
5,000
5,000
15,000
Total selling expenses ………………..……
$ 82,000
$104,000
$126,000
$312,000
Problem 20-8A (Continued)
Part 4
DIMSDALE SPORTS CO.
General and Administrative Expense Budgets
January, February, and March 2016
January
February
March
Total
Salaries …………………………..…………………..
$12,000
$12,000
$12,000
$36,000
Maintenance …………………………..…….……..
2,000
2,000
2,000
6,000
Depreciation* ………………………………..……..
6,000
7,000
7,300
20,300
Total expenses ……………………………..……..
$20,000
$21,000
$21,300
$62,300
* Depreciation expense calculations
Annual
Amount
January
February
March
Total
Equipment owned
on 12/31/2015 ………………..
$67,500
$5,625
$5,625
$5,625
$16,875
Purchased in January………
4,500
375
375
375
1,125
Purchased in February …….
12,000
1,000
1,000
2,000
Purchased in March …………
3,600
______
______
300
300
Totals ……………………………..
$6,000
$7,000
$7,300
$20,300
Part 5
DIMSDALE SPORTS CO.
Capital Expenditures Budgets
January, February, and March 2016
January
February
March
Equipment purchases ……………………………..……
$36,000
$96,000
$ 28,800
Land purchase ………………………………………..……
______
______
150,000
Total ……………………………………………………….
$36,000
$96,000
$178,800
Problem 20-8A (Continued)
Part 6
DIMSDALE SPORTS CO.
Cash Budgets
January, February, and March 2016
January
February
March
Beginning cash balance …………………………….….
$ 36,000
$ 30,100
$210,300
Cash receipts from customers (note A) …………….
221,250
697,000
489,500
Total cash available …………………………………..….
257,250
727,100
699,800
Cash disbursements
Payments for merchandise (note B) ……………….
80,000
302,800
147,600
Sales commissions …………………………………….
77,000
99,000
121,000
Sales salaries …………………………..……………..….
5,000
5,000
5,000
General & administrative salaries …………….….
12,000
12,000
12,000
Maintenance expense ……………………………..….
2,000
2,000
2,000
Interest ($15,000 x 1%) …………………………..……..….
150
Taxes payable …………………………………………….
90,000
Purchases of equipment …………………………..
36,000
96,000
28,800
Purchase of land ……………………………………..….
________
________
150,000
Total cash disbursements…………………………..
212,150
516,800
556,400
Preliminary cash balance …………………………..
45,100
210,300
143,400
Repayment of loan to bank ………………………..…
(15,000)
_______
________
Ending cash balance …………………………………….
$ 30,100
$210,300
$143,400
Loan balance, end of month ………………………….
$ 0
$ 0
$ 0
Supporting calculations
January
February
March
Total
Note A: Cash receipts from customers
Total sales …………………………………………..….
$385,000
$495,000
$605,000
$1,485,000
Cash sales (25%) …………………………………….
96,250
123,750
151,250
371,250
Credit sales (75%) ………………………………..….
288,750
371,250
453,750
1,113,750
Cash collections
Receivables at 12/31/2015 …………………….….
$125,000
$400,000
$525,000
Month after sale (60%) …………………………..
173,250
$222,750
396,000
Second month (40%) ……………………………….
_______
_______
115,500
115,500
Total from credit customers ………………….….
125,000
573,250
338,250
1,036,500
Cash sales …………………………………………..….
96,250
123,750
151,250
371,250
Total cash received ……………………………..…..
$221,250
$697,000
$489,500
$1,407,750
Note B: Cash payments for merchandise
Credit purchases …………………………………….
$114,000
$282,000
$324,000
$720,000
Accounts payables at 12/31/2015
$ 80,000
$280,000
$360,000
Month after purchase (20%) ………………….….
22,800
$ 56,400
79,200
Second month (80%) ……………………………….
_______
_______
91,200
91,200
Total paid on purchases ……………………….….
$ 80,000
$302,800
$147,600
$530,400
Problem 20-8A (Continued)
Part 7
DIMSDALE SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2016
Sales ……………………………………………………………………..
$1,485,000
Cost of goods sold (27,000 units @ $30) ………………...
810,000
Gross profit …………………………………………………………..
675,000
Operating expenses
Sales commissions ……………………………………………..
$297,000
Sales salaries …………………………..………………………….
15,000
General administrative salaries …………………………..
36,000
Maintenance expense ………………………………………….
6,000
Depreciation expense ………………………………………….
20,300
Interest expense ………………………………………………….
150
374,450
Income before taxes ……………………………………………...
300,550
Income taxes (40%)………………………………………………..
120,220
Net income …………………………..………………………………..
$180,330
Part 8
DIMSDALE SPORTS CO.
Budgeted Balance Sheet
March 31, 2016
ASSETS
Cash ………………………………………………..….
$ 143,400
Cash budget
Accounts receivable …………………………..
602,250
Note C
Inventory ………………………………………….….
60,000
Note D
Total current assets …………………………..
805,650
Land ………………………………………………..….
150,000
Capital budget
Equipment …………………………..…………..….
$700,800
Note E
Less accumulated depreciation ………..….
87,800
613,000
Note F
Total assets ……………………………………..….
$1,568,650
LIABILITIES AND EQUITY
Accounts payable …………………………….….
$ 549,600
Note G
Bank loan payable ……………………………….
0
Cash budget
Taxes payable (due 4/15/2016) ………….….
120,220
Income stmt.
Total liabilities ………………………………….….
669,820
Common stock …………………………………….
$472,500
Unchanged
Retained earnings …………………………….….
426,330
Note H
Total stockholders’ equity ………………..….
898,830
Total liabilities and equity …………………….
$1,568,650
Problem 20-8A (Concluded)
Supporting Footnotes
Note C
Beginning receivables …………………………………………..….
$ 525,000
Credit sales …………………………..………………………………….
1,113,750
Less collections ……………………………………………………….
(1,036,500)
Ending receivables ………………………………………………..….
$ 602,250
Note D
Beginning inventory ………………………………………………….
$ 150,000
Purchases …………………………………………………………….….
720,000
Less cost of goods sold ………………………………………..….
(810,000)
Ending inventory* ………………………………………………….….
$ 60,000
*Also equals 2,000 units @ $30 = $60,000
Note E
Beginning equipment …………………………………………….….
$ 540,000
Purchased in January ……………………………………………….
36,000
Purchased in February…………………………………………..….
96,000
Purchased in March ………………………………………………….
28,800
Total …………………………………………………………………….….
$ 700,800
Note F
Beginning accumulated depreciation ……………………..….
$ 67,500
Depreciation expense ……………………………………………….
20,300
Total …………………………………………………………………….….
$ 87,800
Note G
Beginning accounts payable ………………………………….….
$ 360,000
Purchases …………………………………………………………….….
720,000
Payments …………………………..…………………………………….
(530,400)
Ending accounts payable ………………………………………….
$ 549,600
Note H
Beginning retained earnings ………………………………….….
$ 246,000
Net income ……………………………………………………………….
180,330
Total …………………………………………………………………….….
$ 426,330
Problem 20-1B (30 minutes)
Part 1
NSA COMPANY
Production Budget (in units)
Second Quarter
Budgeted ending inventory (bats) ………………………………………….…….
6,000
Add budgeted sales ……………………………………………………………….…….
250,000
Required units of available production …………………………………..…….
256,000
Deduct beginning inventory (bats) ……………………………………………….
(8,000)
Units to be manufactured……………………………………………………….
248,000
Part 2
NSA COMPANY
Direct Materials Budget (in lbs, except where noted)
Second Quarter
Materials (aluminum) needed for production (248,000 x 3) …………
744,000
Add budgeted ending inventory (aluminum) …………………………..
12,000
Total materials (aluminum) requirements ……………………………….…
756,000
Deduct beginning inventory (aluminum) ……………………………………
(15,000)
Units of materials (aluminum) to be purchased …………………………
741,000
Materials cost per pound ……………………………………………………….
$4
Total cost of materials purchases (741,000 x $4) …………………….…
$2,964,000
Problem 20-1B (concluded)
Part 3
NSA COMPANY
Direct Labor Budget
Second Quarter
Units to be produced ………………………………………………………
248,000
Labor requirements per unit (hours) …………………………..
x 0.50
Total labor hours needed …………………………………………..……
124,000
Labor rate (per hour) …………………………..…………………….……
x $18
Labor dollars …………………………………………………………….……
$2,232,000
Part 4
NSA COMPANY
Factory Overhead Budget
Second Quarter
Total labor hours needed …………………………………………..……
124,000
Variable overhead rate per direct labor hour ……………………
x $12
Budgeted variable overhead ……………………………………………
$1,488,000
Budgeted fixed overhead …………………………………………..……
1,776,000
Budgeted total overhead …………………………………………………
$3,264,000
Problem 20-2B (30 minutes)
(1)
A1 MANUFACTURING
Cash Receipts Budget
For July, August, and September
July
August
Sept.
Sales …………………………………………………..…
$63,400
$80,600
$48,600
Less ending accts. receivable (80%) ………
50,720
64,480
38,880
Cash receipts from
Cash sales (20% of sales) …………………..…
12,680
16,120
9,720
Collections of prior month’s receivables ……
47,000
50,720
64,480
Total cash receipts …………………………….…
$59,680
$66,840
$74,200