Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1282
Problem 22-4B (Concluded)
Supporting Footnotes
Note C
Note D
Note E
Beginning finished goods inventory ................................
$ 241,080
Note I
NABAR MANUFACTURING
Budgeted Statement of Retained Earnings
For Three Months Ended September 30, 2017
Retained earnings, beginning ......................... $60,580
1283
Problem 22-5B (60 minutes)
Part 1
H2O SPORTS
Merchandise Purchases Budgets
For April, May, and June
April
May
June
Required units of available merchandise ...........
79,000
103,000
140,000
Less actual (or budgeted) beginning inventory .......
(40,000)
(9,000)
(13,000)
LIFE JACKETS
Budgeted sales for next month ...........................
190,000
200,000
120,000
Ratio of ending inventory to future sales ...........
10%
10%
10%
Budgeted ending inventory ................................
19,000
20,000
12,000
1284
Problem 22-5B (Concluded)
Part 2. Analysis Component
Inventory levels might become too high for a number of reasons, including:
• Management may have simply lost sight of inventory levels, thereby
allowing them to reach inappropriately high levels.
1285
Problem 22-6B (50 minutes)
SONY STEREO
Cash Budgets
For April, May, and June
April
May
June
Beginning balance ..........................................
$ 3,000
$ 53,000
$ 44,000
Cash receipts
Cash payments
Payments on accounts payable** ...............
80,000
188,000
186,000
Payroll ............................................................
16,000
17,000
18,000
Supporting calculations
Collections of credit sales*
March
April
May
June
March sales ($180,000)—[25%: 45%: 20%: 9%] ..............
$ 45,000
$ 81,000
$ 36,000
$ 16,200
1286
Problem 22-7B (70 minutes)
Part 1
Cash collections of credit sales (accounts receivable)
From sales in
Total
% Collected
March
April
January .....................................
$396,000
23%
$ 91,080
Part 2
Budgeted ending inventories (in units)
January
February
March
April
Next month’s budgeted sales units ...........
22,500
19,000
18,750
21,000
Part 3
CONNICK COMPANY
Merchandise Purchases Budgets
For February, March, and April
February
March
April
Budgeted ending inventory units (part 2) .........
3,900
3,850
4,300
1287
Problem 22-7B (Continued)
Part 4
Cash payments on product purchases (for March and April)
From purchases in
Total
% Paid
March
April
February .......................................
$261,600
70%
$183,120
Part 5
CONNICK COMPANY
Cash Budget
March and April
March
April
Beginning cash balance ..........................................................
$ 50,000
$ 58,070
Cash payments for:
Part 6
Analysis Component: Information about the supply of cash in the near future
would be helpful to the management of Connick Company. A good cash
1288
Problem 22-8B (130 minutes)
Part 1
ISLE CORPORATION
Sales Budgets
January, February, and March 2018
Budgeted
Units
Budgeted
Unit Price
Budgeted
Total Dollars
January 2018 .......................................................
6,000
$45
$ 270,000
Part 2
ISLE CORPORATION
Merchandise Purchases Budgets
January, February, and March 2018
January
February
March
Total
Next month’s budgeted sales units .....
8,000
10,000
9,000
Ratio of inventory to future sales .........
x 25%
x 25%
x 25%
Budgeted ending inventory units .........
2,000
2,500
2,250
Part 3
ISLE CORPORATION
Selling Expense Budgets
January, February, and March 2018
January
February
March
Total
Budgeted sales ................................
$270,000
$360,000
$450,000
1289
Problem 22-8B (Continued)
Part 4
ISLE CORPORATION
General and Administrative Expense Budgets
January, February, and March 2018
January
February
March
Total
Salaries .......................................................
$12,000
$12,000
$12,000
$36,000
* Depreciation expense calculations
Annual
Amount
January
February
March
Total
Equipment owned
on 12/31/2017 ....................
$67,500
$5,625
$5,625
$5,625
$16,875
Part 5
ISLE CORPORATION
Capital Expenditures Budgets
January, February, and March 2018
January
February
March
Equipment purchases .........................................
$72,000
$96,000
$ 28,800
1290
Problem 22-8B (Continued)
Part 6
ISLE CORPORATION
Cash Budgets
January, February, and March 2018
January
February
March
Beginning cash balance ......................................
$ 36,000
$182,850
$ 107,850
Cash receipts from customers (note A)................
382,500
421,500
355,500
Total cash available .............................................
418,500
604,350
463,350
Cash payments for:
Taxes payable ....................................................
90,000
Purchases of equipment ................................
72,000
96,000
28,800
Supporting calculations
January
February
March
Total
Note A: Cash receipts from customers
Total sales .........................................................
$270,000
$360,000
$450,000
$1,080,000
Cash sales (25%) ..............................................
$ 67,500
$ 90,000
$112,500
$ 270,000
1291
Problem 22-8B (Continued)
Part 7
ISLE CORPORATION
Budgeted Income Statement
For Three Months Ended March 31, 2018
Sales ................................................................................
$1,080,000
Cost of goods sold (24,000 units @ $30) .....................
720,000
Part 8
ISLE CORPORATION
Budgeted Balance Sheet
March 31, 2018
ASSETS
Cash ............................................................
$ 36,000
Cash budget
Total current assets ................................
549,000
Equipment ..................................................
$736,800
Note E
Less accumulated depreciation ...............
88,925
647,875
Note F
Common stock ...........................................
$472,500
Unchanged
1292
Problem 22-8B (Concluded)
Supporting Footnotes
Note C
Beginning receivables ................................................................
$ 525,000
Note E
Beginning equipment ................................................................
$ 540,000
Purchased in January ................................................................
72,000
Note F
Beginning accumulated depreciation .........................................
$ 67,500
Depreciation expense ................................................................
21,425
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1293
Serial Problem — SP 22
Serial Problem, Business Solutions (50 minutes)
Part 1
BUSINESS SOLUTIONS—Computer Furniture Segment
Budgeted Income Statements
For Months of April, May, and June
April
May
June
Sales* .........................................................
$69,600
$75,550
$81,500
*Results from per month volume increases for the next 3 months
Desks
Units
Sales (@ $1,150)
Variable Cost of Sales (@ $750)
April ................................
48
$55,200
$36,000
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1294
Serial Problem, Business Solutions (Concluded)
Part 2
The plan for increasing sales volume by reducing the price and increasing
advertising would cause the company to generate a loss in the first month
Reporting in Action — BTN 22-1
1. Apple’s statement of cash flows would report cash paid for acquisitions
2. a. Cash paid for acquisitions of property, plant and equipment and
reported on the statement of cash flows for the year ended
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1295
Comparative Analysis — BTN 22-2
1. 1. Apple and Google figures for the most recent 3 years—data available
from Appendix A—are shown below ($ millions):
Apple
Two Years
Prior
One Year
Prior
Current
Year
One
Year
Ahead
Two
Years
Ahead
Google
Two Years
Prior
One Year
Prior
Current
Year
One
Year
Ahead
Two
Years
Ahead
Sales
$55,519
$66,001
$74,989
_______
_______
2. Predictions will vary among students. Based on these three years,
Apple’s SGA/Sales ratio averages 6.35%, while Google’s averages
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1296
Ethics Challenge — BTN 22-3
Report on “Use It or Lose It” Budgeting
Instructor note: There is no widely accepted solution to this problem. The key is for the student to
think about the problem and work to at least modify the negative behavioral consequences of this
practice.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
Communicating in Practice — BTN 22-4
MEMORANDUM
TO: ____________________
FROM: ____________________
DATE: ____________________
SUBJECT: ____________________
The content of this memorandum will vary among students. The student
Taking It to the Net — BTN 22-5
1. The “e-budgets” Website lists a number of benefits such as accuracy, timeliness, ease of
sharing information, ease of updating, real-time comparison of actual performance vs.
estimates, and so on.
2. As a senior manager, my biggest concern would be security, particularly
when the system is easily accessible and usable. It would be important
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1298
Teamwork in Action — BTN 22-6
There is no specific solution to this assignment. The instructor should
watch for proper development and identification of all reasonable costs.
Entrepreneurial Decision — BTN 22-7
1. Budgeting allows an organization to plan its activities better by
2. To expand their operations, Marilyn and Michelle will need financing.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 22
1299
Hitting the Road — BTN 22-8
Instructor note: This problem is designed to (1) show that external factors are important
1. & 2.
The types of external factors identified by the student for consideration in
part (1), or selected as an explanatory factor for part (2), might include the
following:
• Location, such as near a convenient or busy traffic area.
Global Decision — BTN 22-9
1. The selling and administrative expenses budget is likely to be an
important budget in the master budgeting process at Samsung. In 2015,
2. General office expenses
3. The initial responsibility usually rests with a vice president or an
