Solutions Manual, Chapter 9 51
Problem 9-27 (continued)
4.
Shilow Company
Income Statement
For the Quarter Ended June 30
Sales ($60,000 + $72,000 + $90,000) …….
$222,000
Cost of goods sold:
Beginning inventory (Given) ……………….
$ 36,000
Add purchases (Part 2) ………………………
159,300
Goods available for sale ……………………..
195,300
Ending inventory (Part 2) …………………..
28,800
166,500
*
Gross margin ……………………………………..
55,500
Selling and administrative expenses:
Commissions (12% of sales) ……………….
26,640
Rent ($2,500 × 3) …………………………….
7,500
Depreciation ($900 × 3) …………………….
2,700
Other expenses (6% of sales) ……………..
13,320
50,160
Net operating income ………………………….
5,340
Interest expense (Part 4) ……………………..
230
Net income ……………………………………….
$ 5,110
52 Managerial Accounting for Managers, 4th Edition
Problem 9-27 (continued)
5.
Current assets:
Cash (Part 4) ………………………………………………………
$ 4,910
Accounts receivable ($90,000 × 40%) ………………………
36,000
Inventory (Part 2) ………………………………………………..
28,800
Total current assets ………………………………………………..
69,710
Building and equipment—net
($120,000 + $1,500 – $2,700) ………………………………..
118,800
Total assets …………………………………………………………..
$188,510
Liabilities and Stockholders’ Equity
Accounts payable (Part 2: $42,300 × 50%) ..
$ 21,150
Stockholders’ equity:
Common stock (Given) ………………………..
$150,000
Retained earnings* …………………………….
17,360
167,360
Total liabilities and stockholders’ equity ……..
$188,510
*
Beginning retained earnings ………………..
$12,250
Add net income …………………………………
5,110
Ending retained earnings …………………….
$17,360
Solutions Manual, Chapter 9 53
Problem 9-28 (60 minutes)
1. The sales budget for the third quarter:
Month
July
August
September
Quarter
Budgeted units sales …..
30,000
70,000
50,000
150,000
Selling price per unit …..
× $12
× $12
× $12
× $12
Budgeted sales ………….
$360,000
$840,000
$600,000
$1,800,000
Accounts receivable,
June 30:
$300,000 × 65% …..
$195,000
$ 195,000
July sales:
$360,000 × 30%,
65% ……………………
108,000
$234,000
342,000
August sales:
$840,000 × 30%,
65% ……………………
252,000
$546,000
798,000
September sales:
$600,000 × 30% …..
180,000
180,000
Total cash collections ..
$303,000
$486,000
$726,000
$1,515,000
2. The production budget for July-October:
July
August
September
October
Budgeted unit sales ……………
30,000
70,000
50,000
20,000
Add desired units of ending
finished goods inventory……
10,500
7,500
3,000
1,500
Total needs ………………………
40,500
77,500
53,000
21,500
Less units of beginning
finished goods inventory……
4,500
10,500
7,500
3,000
Required production in units…
36,000
67,000
45,500
18,500
54 Managerial Accounting for Managers, 4th Edition
Problem 9-28 (continued)
3. The direct materials budget for the third quarter:
July
August
September
Quarter
Required production in units of
finished goods ………………………..
36,000
67,000
45,500
148,500
Units of raw materials needed per
unit of finished goods ……………….
× 4
× 4
× 4
× 4
Units of raw materials needed to
meet production ……………………..
144,000
268,000
182,000
594,000
Add desired units of ending raw
materials inventory ………………….
134,000
91,000
37,000
37,000
Total units of raw materials
needed ………………………………….
278,000
359,000
219,000
631,000
Less units of beginning raw
materials inventory ………………….
72,000
134,000
91,000
72,000
Units of raw materials to be
purchased ……………………………..
206,000
225,000
128,000
559,000
Unit cost of raw materials ……………
× $0.80
× $0.80
× $0.80
× $0.80
Cost of raw materials to be
purchased ……………………………..
$164,800
$180,000
$102,400
$447,200
*18,500 units (October) × 4 feet per unit = 74,000 feet
74,000 feet × ½ = 37,000 feet
Solutions Manual, Chapter 9 55
Problem 9-28 (continued)
3. The schedule of expected cash disbursements for materials purchases:
July
August
September
Quarter
Accounts payable,
June 30 ……………………
$ 76,000
$ 76,000
July purchases:
$164,800 × 50%, 50% .
82,400
$ 82,400
164,800
August purchases:
$180,000 × 50%, 50% .
90,000
$ 90,000
180,000
September purchases:
$102,400 × 50% ……….
51,200
51,200
Total cash disbursements .
$158,400
$172,400
$141,200
$472,000
56 Managerial Accounting for Managers, 4th Edition
Problem 9-29 (120 minutes)
1. Schedule of expected cash collections:
January
February
March
Quarter
Cash sales ………………..
$ 80,000
*
$120,000
$ 60,000
$ 260,000
Credit sales ………………
224,000
*
320,000
480,000
1,024,000
Total cash collections ….
$304,000
*
$440,000
$540,000
$1,284,000
* Given.
2. a. Merchandise purchases budget:
January
February
March
Quarter
Budgeted cost of goods
sold1 ……………………..
$240,000
*
$360,000
*
$180,000
$780,000
Add desired ending
merchandise
inventory2 ……………….
90,000
*
45,000
30,000
30,000
Total needs ……………..
330,000
*
405,000
210,000
810,000
Less beginning
merchandise
inventory ………………..
60,000
*
90,000
45,000
60,000
Required purchases …….
$270,000
*
$315,000
$165,000
$750,000
1For January sales: $400,000 × 60% cost ratio = $240,000.
2At January 31: $360,000 × 25% = $90,000. At March 31: $200,000
April sales × 60% cost ratio × 25% = $30,000.
* Given.
b. Schedule of expected cash disbursements for merchandise purchases:
January
February
March
Quarter
December
purchases …………
$ 93,000
*
$ 93,000
*
January purchases ..
135,000
*
$135,000
*
270,000
*
February purchases .
157,500
$157,500
315,000
March purchases …..
82,500
82,500
Total cash
disbursements for
purchases …………
$228,000
*
$292,500
$240,000
$760,500
* Given.
Solutions Manual, Chapter 9 57
Problem 9-29 (continued)
3. Cash budget:
January
February
March
Quarter
Beginning cash balance …..
$ 48,000
*
$ 30,000
$ 30,800
$ 48,000
Add collections from
customers ………………….
304,000
*
440,000
540,000
1,284,000
Total cash available ………..
352,000
*
470,000
570,800
1,332,000
Less cash disbursements:
Inventory purchases …….
228,000
*
292,500
240,000
760,500
Selling and administrative
expenses …………………
129,000
*
145,000
121,000
395,000
Equipment purchases …..
0
1,700
84,500
86,200
Cash dividends ……………
45,000
*
0
0
45,000
Total cash disbursements ..
402,000
*
439,200
445,500
1,286,700
Excess (deficiency) of cash
available over
disbursements ……………
(50,000)
*
30,800
125,300
45,300
Financing:
Borrowings ………………..
80,000
0
0
80,000
Repayments ……………….
0
0
(80,000)
(80,000)
Interest
($80,000 × 1% × 3) ….
0
0
(2,400)
(2,400)
Total financing ………………
80,000
0
(82,400)
(2,400)
Ending cash balance ………
$ 30,000
$ 30,800
$ 42,900
$ 42,900
* Given.