Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1263
Problem 20-4B (130 minutes)
Part 1
NABAR MANUFACTURING
Sales Budgets
July
August
September
Budgeted sales units ………………………….
21,000
19,000
20,000
Part 2
NABAR MANUFACTURING
Production Budget
July
August
Sept.
Total
Budgeted sales units ……………………….
21,000
19,000
20,000
Add: Desired ending inventory
Next period budgeted sales units ……
19,000
20,000
24,000
Ratio of inventory to future sales ……
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1264
Problem 20-4B (continued)
Part 3
NABAR MANUFACTURING
Direct Materials Budget
July
August
Sept.
Total
Units to produce…………………………………….
17,500
19,700
22,800
Materials required per unit (lbs) ……………..
x 0.50
x 0.50
x 0.50
Materials needed for production (lbs) ……..
8,750
9,850
11,400
Add: Desired ending inventory (lbs) ……………..
Total materials required (lbs) ………………….
10,720
12,130
13,380
Less: Beginning materials inventory (lbs) …….
Materials to purchase (lbs) ………………..
Materials cost per pound ………………………..
$ 88,800
Part 4
NABAR MANUFACTURING
Direct Labor Budget
July
August
Sept.
Total
Units to produce……………………………….
17,500
19,700
22,800
$ 16
$140,000
Part 5
NABAR MANUFACTURING
Factory Overhead Budget
July
August
Sept.
Total
Direct labor hours needed …………………….
8,750
9,850
11,400
Variable overhead rate per direct labor hour ……
x $2.70
x $2.70
x $2.70
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1265
Problem 20-4B (continued)
Part 6
NABAR MANUFACTURING
Selling Expense Budgets
July
August
Sept.
Total
Budgeted sales ………………………..
$357,000
$323,000
$340,000
Sales commission of 10% ……..
x 10%
x 10%
x 10%
Sales commissions ………………….
$102,000
Sales salaries …………………………..
Part 7
NABAR MANUFACTURING
General and Administrative Expense Budgets
July
August
Sept.
Total
Administrative salaries ……………….
$ 9,000
$ 9,000
$ 9,000
$27,000
Part 8
NABAR MANUFACTURING
Schedule of Cash Receipts from Sales
July
August
Sept.
Sales ……………………………………………………….
$357,000
$323,000
$340,000
Cash receipts from
$ 96,900
1266
Problem 20-4B (continued)
Part 9
NABAR MANUFACTURING
Schedule of Cash Payments for Direct Materials
July
August
Sept.
Materials purchases …………………………………
$ 50,760
$ 81,280
$ 88,800
Cash payments for
Part 10
NABAR MANUFACTURING
Cash Budget
July
August
Sept.
Beginning cash balance ………………………….
$ 40,000
$ 95,855
$140,200
Add: Cash receipts from sales (part 8) ……….
356,020
346,800
328,100
Total cash available ………………………………..
396,020
442,655
468,300
Less: Cash payments for
Direct materials (part 9) …………………………...
51,400
50,760
81,280
0
0
100,000
$140,200
$ 24,640
Loan activity
Additional loan ……………………………………..
Repayment of loan ………………………………..
$ 0
24,000
$ 0
______0
$ 15,360
_______0
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1267
Problem 20-4B (Continued)
Part 11
NABAR MANUFACTURING
Budgeted Income Statement
For Three Months Ended September 30
Sales …………………………………………………………………..
$1,020,000
Cost of goods sold (60,000 units x $14.35) ……………
861,000
Gross profit …………………………..…………………………….
159,000
Selling, general and administrative expenses
27,000
Income before income taxes ………………………………..
Part 12
NABAR MANUFACTURING
Budgeted Balance Sheet
September 30
ASSETS
Cash …………………………..………………….
$ 40,000
Cash budget
Accounts receivable ………………………
238,000
Note A
Equipment …………………………..…………
Note D
Less: Accumulated depreciation …….
Note E
LIABILITIES AND EQUITY
Liabilities
Accounts payable …………………………..
$ 88,800
Note F
Loan payable …………………………………
15,360
Cash budget
Taxes payable ………………………………..
Income stmt.
Long-term note payable ………………….
Equity
Common stock ………………………………
Unchanged
Retained earnings ………………………….
Note G
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20-4B (Concluded)
Supporting Footnotes
Note A
Beginning accounts receivable ………………………………
$ 248,920
Credit sales (70% of total sales) ……………………………..
714,000
Less collections (from part 8: $248,920+$249,900+$226,100) ….
(724,920)
Ending accounts receivable …………………………………..
Note B
Beginning raw materials inventory …………………………
$ 35,000
Purchases of raw materials ……………………………………
220,840
(240,000)
Ending raw materials inventory* …………………………….
$ 15,840
Note C
Beginning finished goods inventory ……………………….
$ 241,080
Cost of goods completed during the period* …………..
861,000
Less cost of goods sold during the period ………………
(861,000)
Ending finished goods inventory** …………………………
$ 241,080
* 60,000 units to produce (from part 2) x $14.35 cost
**Also equals 16,800 units x $14.35 = $241,080
Note D
Beginning equipment …………………………………………….
$ 720,000
Purchased in September ………………………………………..
100,000
Ending equipment …………………………………………………
$ 820,000
Note E
Beginning accumulated depreciation ……………………..
$ 240,000
Depreciation expense…………………………………………….
60,000
Ending accumulated depreciation ………………………….
$ 300,000
Note F
Beginning accounts payable ………………………………….
$ 51,400
Purchases of raw materials ……………………………………
220,840
Payments for raw materials (from part 9) ………………….
(183,440)
Ending accounts payable ………………………………………
$ 88,800
Note G
NABAR MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended September 30
Retained earnings, beginning……………………….. $59,600
Add: Net income …………………………………… 7,254
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20-5BA (60 minutes)
Part 1
H2O SPORTS
Merchandise Purchases Budgets
April
May
June
WATER SKIS
Budgeted sales units …………………………………..
70,000
90,000
130,000
Add: Desired ending inventory
Next period budgeted sales units ……………..
130,000
100,000
Ratio of inventory to future sales ………………
Desired ending inventory units …………………
13,000
10,000
Total required units ……………………………………..
79,000
103,000
140,000
Less: Beginning inventory units ………………………
Units to purchase ………………………………………..
127,000
TOW ROPES
Budgeted sales units …………………………………..
100,000
90,000
110,000
Add: Desired ending inventory
Next period budgeted sales units ……………..
90,000
110,000
100,000
Ratio of inventory to future sales ………………
10%
10%
10%
Desired ending inventory units …………………
9,000
11,000
10,000
Total required units ……………………………………..
109,000
101,000
120,000
Less: Beginning inventory units ………………………
90,000
9,000
11,000
Units to purchase ………………………………………..
19,000
92,000
109,000
Budgeted sales units …………………………………..
Add: Desired ending inventory
Ratio of inventory to future sales ………………
Desired ending inventory units …………………
Total required units ……………………………………..
1270
Problem 20-6BA (50 minutes)
Part 1
SONY STEREO
Schedule of Cash Receipts from Sales
April
May
June
Sales ……………………………………………………
$220,000
$300,000
$380,000
Cash receipts from
$198,000
Part 2
SONY STEREO
Schedule of Cash Payments for Direct Materials
April
May
June
Materials purchases …………………………..
$210,000
$180,000
$220,000
Cash payments for
$168,000
0
1271
Problem 20-6BA (continued)
Part 3
SONY STEREO
Cash Budget
April
May
June
Beginning balance ………………………………
$ 3,000
$110,200
$ 82,400
Add: Cash receipts from sales (part 1) ……
162,000
216,000
292,000
Total cash available …………………………….
165,000
326,200
374,400
Less: Cash payments for
Loan activity
Additional loan ……………………………………
$ 80,000
$ 0
$ 0
Repayment on loan ……………………………..
0
0
80,000
$ 82,400
1272
Problem 20-7BA (70 minutes)
Part 1
CONNICK COMPANY
Schedule of Cash Receipts from Sales
Feb.
March
April
Sales ……………………………………………………..
$495,000
$418,000
$412,500
Cash receipts from
Total cash receipts …………………………………
Part 2
CONNICK COMPANY
Merchandise Purchases Budgets
March
April
Budgeted sales units ………………………………….
19,000
18,750
Add: Desired ending inventory
Next period budgeted sales units ……………
18,750
21,000
22,750
22,950
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
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Problem 20-7BA (Continued)
Part 3
CONNICK COMPANY
Schedule of Cash Payments for Merchandise Purchases
February
March
April
Merchandise purchases
$261,600
$227,400
$230,400
Cash payments for
Part 4
CONNICK COMPANY
Cash Budget
March
April
Beginning cash balance ………………………………………
$ 50,000
$ 90,740
Add: Cash receipts from sales ……………………………..
464,200
415,800
Total available cash …………………………………………….
514,200
506,540
120
0
411,460
388,300
Loan activity
Additional loan ………………………………………………..
$ 0
$ 0
Repayment of loan …………………………………………..
12,000
_______0
Wild and Shaw, Financial & Managerial Accounting 9e Solutions Manual: Chapter 20
1274
Problem 20-8BA (130 minutes)
Part 1
ISLE CORPORATION
Sales Budgets
January
February
March
Totals
Budgeted sales units ………….
6,000
8,000
10,000
24,000
Part 2
ISLE CORPORATION
Merchandise Purchases Budgets
January
February
March
Total
Budgeted sales units ……………………….
6,000
8,000
10,000
Add: Desired ending inventory
Next period budgeted sales units ….
8,000
10,000
9,000
Ratio of inventory to future sales …..
Desired ending inventory units ……..
Part 3
ISLE CORPORATION
Selling Expense Budgets
January
February
March
Total
Budgeted sales ………………………..
$270,000
$360,000
$450,000
Sales commission of 20% ……….
x 20%
x 20%
x 20%
Sales commissions ………………….
Sales salaries …………………………..