Solved by verified expert :Top of Form
Go to printed page:Bottom of FormLoading
1. Sales and
variable costs of sales are expected to increase by 5 percent in the next
quarter
2. All sales are
on credit with 50 percent collected in the quarter of sale and 50 percent
collected in the following quarter.
3. Variable cost
of sales consists of 40 percent materials, 40 percent direct labor, and 20
percent variable overhead. Materials are purchased on credit. Sixty percent are
paid for in the quarter of purchase, and the remaining amount is paid for in
the quarter after purchase. There is no inventory. Also, direct labor and
variable overhead costs are paid in the quarter the expenses are incurred.
4. Fixed
production costs (other than $3,000 of depreciation expense) are expected to
increase by 2 percent. Fixed production costs requiring payment are paid in the
quarter they are incurred.
5. Fixed selling
and administrative costs (other than $4,000 of depreciation expense) are
expected to increase by 2 percent. Fixed selling and administrative costs
requiring payment are paid in the quarter they are incurred.
6. The tax rate
is expected to be 40 percent. All taxes are paid in the quarter they are
incurred.
7. No purchases
of fixtures or equipment are expected in the first quarter of 2012.
Required
A.
Preparea budgeted income statement for the first quarter of
2012.
Prepare a
budgeted statement of cash receipts and disbursements for the first
quarter of 2012.
Prepare a
budgeted balance sheet as of the end of the first quarter of 2012.
PROBLEM 10-3.
Master Budget [LO 2] Techlabs
operates a computer training center. The following data relate to the
preparation of a master budget for January 2012.
1.
At the end of 2011, the company’s general ledger
indicated the following balances:
Debits
Credits
Cash
$ 50,000
Accounts
Payable
$ 40,000
Accounts
receivable
40,000
Note
payable
60,000
Equipment
(net)
120,000
Common
stock
30,000
Retained
earnings
80,000
Total
$210,000
$210,000
2.Tuition revenue in December 2011 was $80,000, and tuition
revenue budgeted for January 2012 is $90,000.
3 .Fifty percent of tuition revenue is collected in the
month earned, and 50 percent is collected in the subsequent month. The
receivable balance at the end of 2012 reflects tuition earned in December 2012.
4. 40,000; rent, $5,000; depreciation on equipment, $7,000;
utilities, $800; other, $2,000.
5.Expenses are paid in the month incurred. Purchases of
equipment are paid in the month after purchase. The $40,000 payable at the end
of 2011 represents money owed for the purchase of computer equipment in
December 2011.
6.The company intends to purchase $30,000 of computer
equipment in January 2012. The anticipated $7,000 per month of depreciation
(seenumber
4) reflects the
addition of $1,000 of monthly depreciation related to this purchase.
7.The note is at 10 percent per annum and requires monthly
interest payments of $500. The payments are made on the 20th of each month. The
principal must be paid in February of 2013.
8.The tax rate is 35 percent.
Required
Complete
the following budgets:
Top of Form
Go to printed page:Bottom of FormLoading
A
Cash Budget For January 2012
Cash
receipts
Collection
of December 2011 tuition
$
Collection
of January 2012 tuition
Total
cash receipts
Cash
disbursements
Payment
of salaries
Payment
of rent
Payment
of utilities
Payment
of other expenses
Payment
for purchases of computer equipment
Payment
of interest on note
Payment
of taxes
Total
disbursements
Plus
beginning cash balance
Ending
cash balance
$
B.
Budget Income Statement For January 2012
Tuition
revenue
$
Less:
Salaries
Rent
Utilities
Depreciation
Other
Interest
expense
Total expense
Income
before taxes
Taxes on
income
Net
income
$
C.
Budgeted Balance Sheet As of January 30, 2012
Assets
Cash
$
Accounts
receivable
Equipment
(net)
Total
assets
$
Liabilities
Accounts
payable
$
Note
payable
Total
liabilities
$
Stockholders’
equity
Common
stock
Retained
earnings
Total
stockholders’ equity
Total
liabilities and stockholders’ equity
$
