Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1191
Exercise 20–30 (10 minutes)
HECTOR COMPANY
Budgeted Cash Payments
For August and September
August
Sept.
Payments for:
Merchandise* ………………………………………………………………….
$14,400
$19,200
Rent expense ………………………………………………………………….
7,400
7,400
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1192
Exercise 20-31 (25 minutes)
CASTOR, INC.
Cash Budget
For April, May, and June
April
May
Beginning cash balance* ……………………….
$12,000
$12,000
Cash receipts**………………………………………
28,000
36,000
Total cash available ………………………………
40,000
48,000
Cash payments for:
Merchandise ………………………………………….
20,200
16,800
Interest on bank loan
April ($2,000 x 1%) ………………………………
May ($6,060 x 1%) ……………………………….
Preliminary cash balance ………………………
20
______
$7,940
61
$18,339
Additional loan from bank ……………………..
Repayment of loan to bank …………………….
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1193
Exercise 20-31 (continued)
CASTOR, INC.
Cash Receipts Budget
For April, May, and June
April
May
Sales ……………………………………………………..
$32,000
$40,000
Less ending accts. receivable (50%) ………
16,000
20,000
16,000
Exercise 20-32 (30 minutes)
(1)
KELSEY
Cash Receipts Budget
For July, August, and September
July
August
Sales ……………………………………………………..
$64,000
$80,000
Less ending accts. receivable (80%) ………
51,200
64,000
Cash sales (20% of sales) ……………………..
16,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1194
Exercise 20-32 (continued)
(2)
KELSEY
Cash Budget
For July, August, and September
July
August
Sept.
Beginning cash balance* ……………………….
$15,000
$15,000
$25,504
Cash receipts (from part 1) …………………….
57,800
67,200
73,600
Total cash available ………………………………
72,800
82,200
99,104
Cash payments for:
Merchandise ………………………………………….
40,400
33,600
34,400
Sales commissions (10% of sales) …………
Additional loan from bank ……………………..
Repayment of loan to bank …………………….
450
4,550
______
Ending cash balance …………………………..
$15,000
$25,504
$49,404
$ 4,550
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
Exercise 20-33 (15 minutes)
ZETROV COMPANY
Budgeted Balance Sheet
As of March 31
ASSETS
Cash ……………………………………………………………………..
$ 50,000
Accounts receivable ($140,000 x 70%) ………………………..
98,000
Total current assets ……………………………………………….
$84,000
Less accumulated depreciation (note 1) ………………….
LIABILITIES AND EQUITY
Liabilities
Accounts payable ……………………………………………….
$89,000
Bank loan payable ……………………………………………….
Common stock …………………………………………………….
Supporting calculations
(1) Accumulated depreciation
Beginning ……………………………………………………….
$46,000
Depreciation expense …………………………..
Ending ……………………………………………………….
$47,000
(2) Retained earnings
Beginning ……………………………………………………….
$ 8,000
Net income ……………………………………………………….
Ending ……………………………………………………….
$56,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
Exercise 20-34 (15 minutes)
FORTUNE, INC.
Budgeted Income Statement
For Quarter Ended March 31
Sales (note 1) ……………………………………………………………
$3,750,000
Cost of goods sold (note 2) ………………………………………
2,100,000
Gross profit ……………………………………………………………
1,650,000
Operating expenses
Supporting calculations
(1) Sales
Unit sales (45,000 + 55,000 + 50,000) ………….
Unit price …………………………………………………
$25
(2) Cost of goods sold
Unit cost…………………………………………………..
(3) Income tax expense
Pre-tax income …………………………………………
$ 397,375
Tax rate ……………………………………………………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1197
Exercise 20-35 (15 minutes)
RENDER CO. CPA
Activity-Based Budget
For Year Ending December 31, 2019
Budgeted
Hours
Budgeted
Price/hour
Budgeted
Cost
Data-entry ……………………………………………..
2,200
$15
$ 33,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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PROBLEM SET A
Problem 20-1A (40 minutes)
Part 1
BLACK DIAMOND COMPANY
Production Budget (in units)
Third Quarter
Budgeted ending inventory (skis) …………………………………………………
3,500
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 (lbs. of carbon fiber) ………………..
4,000
295,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1199
Problem 20-1A (concluded)
Part 3
BLACK DIAMOND COMPANY
Direct Labor Budget
Third Quarter
Units to be produced ………………………………………………………
148,500
Labor requirements per unit (hours) …………………………..
x 0.50
Total labor hours needed ………………………………………………..
Direct labor rate (per hour) ……………………………………………..
x $20
Part 4
BLACK DIAMOND COMPANY
Factory Overhead Budget
Third Quarter
Total labor hours needed ………………………………………………..
74,250
Variable overhead rate per DL hour …………………………………
x $8
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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Problem 20-2A (30 minutes)
(1)
BUILT-TIGHT
Cash Receipts Budget
For July, August, and September
July
August
Sales ……………………………………………………..
$64,000
$80,000
Less ending accts. receivable (80%) ………
51,200
64,000
Cash sales (20% of sales) ……………………..
16,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1201
Problem 20-2A (continued)
(2)
BUILT-TIGHT
Cash Budget
For July, August, and September
July
August
Sept.
Beginning cash balance* ……………………….
$15,000
$15,000
$25,504
Cash receipts (from part 1) …………………….
57,800
67,200
73,600
Total cash available ………………………………
72,800
82,200
99,104
Cash payments for:
16,160
13,440
13,760
Interest on bank loan
July ($5,000 x 1%)* ………………………………
August ($4,550 x 1%)** ………………………..
Preliminary cash balance ………………………
50
_______
$15,450
46
$30,054
_______
$49,404
Additional loan from bank ……………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
Problem 20-3A (50 minutes)
Part 1
MERLINE MANUFACTURING
Budgeted Income Statement
For Months of January, February, and March, 2020
January
February
March
Sales* ……………………………………………….
$2,062,500
$2,268,750
$2,495,625
Cost of goods sold* …………………………..
1,237,500
1,361,250
1,497,375
Gross profit ………………………………………
825,000
907,500
998,250
Expenses
287,500
287,500
287,500
Total expenses ………………………………….
* Volume for the next three months increases by 10% per month
Sales
Cost of Goods
Units
(@ $125)
Sold (@ $75)
December ($2,250,000/$150) …………………
15,000
February ……………………………………………..
18,150
March ………………………………………………….
19,965
Part 2: Analysis Component
No, March sales are not expected to increase with the new strategy. The plan for
increasing sales volume by reducing the price and increasing advertising would
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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Problem 20-4A (130 minutes)
Part 1
ZIGBY MANUFACTURING
Sales Budgets
April, May, and June 2019
Budgeted
Units
Budgeted
Unit Price
Budgeted
Sales Dollars
April 2019 …………………………..…………………………
20,500
$23.85
$ 488,925
20,000
Part 2
ZIGBY MANUFACTURING
Production Budget
April, May, and June 2019
April
May
June
Total
Next month’s budgeted sales ……………
19,500
20,000
20,500
Ratio of inventory to future sales ………
x 80%
x 80%
x 80%
Add budgeted sales ………………………….
Deduct beginning inventory ……………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1204
Problem 20-4A (continued)
Part 3
ZIGBY MANUFACTURING
Raw Materials Budget
April, May, and June 2019
April
May
June
Total
Production budget (units) …………………
19,700
19,900
20,400
Materials requirement per unit ………….
x 0.50
x 0.50
x 0.50
Materials needed for production ……….
Add budgeted ending inventory ………..
Deduct beginning inventory ……………..
Materials to be purchased ………………..
Material price per unit ………………………
$ 20
Part 4
ZIGBY MANUFACTURING
Direct Labor Budget
April, May, and June 2019
April
May
June
Total
Budgeted production (units) …………….
19,700
19,900
20,400
Labor requirements per unit (hours) ….
Total labor hours needed ………………….
Budgeted direct labor cost ……………….
Part 5
ZIGBY MANUFACTURING
Factory Overhead Budget
April, May, and June 2019
April
May
June
Total
Labor hours needed ………………………..
9,850
9,950
10,200
Variable factory overhead rate …………
x $2.70
Budgeted variable overhead ……………
27,540
Budgeted fixed overhead ………………..
1205
Problem 20-4A (continued)
Part 6
ZIGBY MANUFACTURING
Selling Expense Budgets
April, May, and June 2019
April
May
June
Total
Budgeted sales …………………………..
$488,925
$465,075
$477,000
Sales commission percent ………………
x 8%
Part 7
ZIGBY MANUFACTURING
General and Administrative Expense Budgets
April, May, and June 2019
April
May
June
Total
Salaries ……………………………………………….
$12,000
$12,000
$12,000
$36,000
1206
Problem 20-4A (Continued)
Part 8
ZIGBY MANUFACTURING
Cash Budgets
April, May, and June 2019
April
May
June
Beginning cash balance ………………………………..
$ 40,000
$ 83,346
$124,295
Cash receipts from customers (note A)…………….
488,925
481,770
468,653
Total cash available ………………………………………
528,925
565,116
592,948
Cash payments for:
200,500
198,000
201,500
39,114
37,206
38,160
12,000
12,000
12,000
10,000
Total cash payments …………………………………….
433,579
440,821
569,700
Preliminary cash balance …………………………..
95,346
124,295
23,248
Additional loan ……………………………………………..
Repayment of loan to bank …………………………..
(12,000)
_______
16,752
_______
Ending cash balance …………………………………….
$ 83,346
$124,295
$ 40,000
Loan balance, end of month ………………………….
$ 0
$ 0
$ 16,752
Supporting calculations
April
May
June
Total
Note A: Cash receipts from customers
Cash collections
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
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Problem 20-4A (Continued)
Part 9
ZIGBY MANUFACTURING
Budgeted Income Statement
For Three Months Ended June 30, 2019
Sales ……………………………………………………………………..
$1,431,000
Cost of goods sold (60,000 units @ $19.85) …………….
1,191,000
Gross profit …………………………………………………………..
240,000
$114,480
Income before taxes ………………………………………………
Part 10
ZIGBY MANUFACTURING
Budgeted Balance Sheet
ASSETS
Cash budget
Accounts receivable …………………………..
333,900
Note C
Total current assets …………………………..
779,440
Equipment …………………………………………..
$730,000
Note F
Less accumulated depreciation ……………
210,000
520,000
Note G
Total assets …………………………………………
$1,299,440
LIABILITIES AND EQUITY
Accounts payable ………………………………..
$ 182,000
Note H
Bank loan payable ……………………………….
Cash budget
Taxes payable ……………………………………..
23,415
Income stmt.
Total current liabilities …………………………
222,167
Common stock …………………………………….
$335,000
Retained earnings ………………………………..
242,273
Note I
577,273
1208
Problem 20-4A (Concluded)
Supporting Footnotes
Note C
Beginning receivables ………………………………………………
$ 342,248
Credit sales ………………………………………………………………
Less collections ……………………………………………………….
Ending receivables ……………………………………………………
Note D
Beginning raw materials inventory …………………………..
$ 98,500
Purchases of raw materials ……………………………………….
Less materials used in production** …………………………..
(600,000)
Ending raw materials inventory* ………………………………..
Note E
Beginning finished goods inventory …………………………..
$ 325,540
Cost of goods completed during the period ……………….
1,191,000
Less cost of goods sold during the period …………………
(1,191,000)
Ending finished goods inventory*…………………………..
$ 325,540
*Also equals 16,400 units @ $19.85 = $325,540
Note F
Beginning equipment ………………………………………………..
$ 600,000
Purchased in June ……………………………………………………
130,000
Total ………………………………………………………………………..
Note G
Beginning accumulated depreciation …………………………
$ 150,000
Depreciation expense ……………………………………………….
60,000
Total ………………………………………………………………………..
Note H
Beginning accounts payable ……………………………………..
$ 200,500
Purchases of raw materials ……………………………………….
Payments for raw materials ……………………………………….
(600,000)
Ending accounts payable ………………………………………….
Note I
ZIGBY MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended June 30, 2019
Retained earnings, beginning ……………………………………… $208,788
Add: Net income …………………………..………………. 43,485
252,273
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
Problem 20-5A (50 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 …………………………..
10,500
Add budgeted sales ……………………………………….
Required units of available merchandise ………..
22,500
34,600
42,500
Budgeted purchases ……………………………………..
SPORTS EQUIPMENT
Budgeted sales for next month ………………………
90,000
95,000
90,000
Ratio of ending inventory to future sales ………..
30%
30%
30%
Budgeted ending inventory …………………………..
27,000
28,500
27,000
Add budgeted sales ……………………………………….
70,000
90,000
95,000
Required units of available merchandise ………..
97,000
Budgeted purchases ……………………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 20
1210
Problem 20-6A (50 minutes)
ONEIDA COMPANY
Cash Budget
For September, October, and November
September
October
November
Beginning balance ……………………………………
$ 5,000
$ 99,250
$ 69,500
Cash receipts
Collection on accounts receivable* …………
159,250
249,250
338,100
Receipts from bank loan …………………………
Payroll ……………………………………………………
20,000
22,000
24,000
Rent ……………………………………………………….
Other expenses ………………………………………
35,000
30,000
20,000
Repayment on bank loan ………………………..
100,000
Interest on bank loan*** ………………………….
________
________
3,000
Total cash payments ………………………………
$ 69,500
$ 22,600
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
Oct. sales ($375,000)—[25%: 45%] …………………………..
–
Payments on credit purchases**
August
September
October
November
Aug. purchases ($125,000)—(0%: 80%: 20%) …………………………..
$ 0
$100,000
$ 25,000
$ –
Oct. purchases ($225,000)—(0%: 80%) …………………………..
–