Schedule of expected cash disbursements

The marketing department of Graber Corporation has submitted the following sales forecast for the upcoming fiscal year.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Budgeted unit sales 15,000 14,000 13,000 14,000

The selling price of the company’s product is $24.00 per unit. Management expects to collect 75% of sales in the quarter in which the sales are made, 20% in the following quarter, and 5% of sales are expected to be uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $66,000.

The company expects to start the first quarter with 2,250 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter’s budgeted sales. The desired ending finished goods inventory for the fourth quarter is 2,450 units.

Required:
1a.
Compute the company’s total sales.

1b.
Complete the schedule of expected cash collections. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

2.
Prepare the company’s production budget for the upcoming fiscal year. (Input all amounts as positive values. Do not round intermediate calculations.)

The production department of Priston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 7,000 8,000 9,000 6,000

In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 5,250 pounds and the beginning accounts payable for the 1st Quarter is budgeted to be $13,300.

Each unit requires three pounds of raw material that costs $2.00 per pound. Management desires to end each quarter with a raw materials inventory equal to 25% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 4,500 pounds. Management plans to pay for 70% of raw material purchases in the quarter acquired and 30% in the following quarter. Each unit requires 0.5 direct labor-hours and direct labor-hour workers are paid $14 per hour.

Required:
1a.
Prepare the company’s direct materials budget for the upcoming fiscal year. (Input all amounts as positive values. Do not round intermediate calculations.)

1b.
Prepare a schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations.)

2.
Complete the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

The Production Department of Harveton Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year.

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Units to be produced 9,000 8,000 7,000 8,000

Each unit requires 1.00 direct labor-hours and direct labor-hour workers are paid $12.00 per hour.
In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $82,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $34,000 per quarter.

Required:
1.
Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

2.Prepare the company’s manufacturing overhead budget. (Input all amounts as positive values.)

Colerain Corporation is a merchandising company that is preparing a profit plan for the third quarter of the calendar year. The company’s balance sheet as of June 30 is shown below:

Colerain Corporation
Balance Sheet
June 30
Assets
Cash $ 93,000
Accounts receivable 152,000
Inventory 45,000
Plant and equipment, net of depreciation 330,000

Total assets $ 620,000

Liabilities and Stockholders’ Equity
Accounts payable $ 68,100
Common stock 430,000
Retained earnings 121,900

Total liabilities and stockholders’ equity $ 620,000

Colerain’s managers have made the following additional assumptions and estimates:

1.
Estimated sales for July, August, September, and October will be $250,000, $270,000, $260,000, and $280,000, respectively.

2.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3.
Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 50% of its merchandise purchases in the month of the purchase and the remaining 50% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4.
Monthly selling and administrative expenses are always $85,000. Each month $6,000 of this total amount is depreciation expense and the remaining $79,000 relates to expenses that are paid in the month they are incurred.

5.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1.
Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30th. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

2a.
Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30th. (Input all amounts as positive values. Do not round intermediate calculations.)

Merchandise Purchases Budget

2b.
Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30th. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

Schedule of Expected Cash Disbursements—Merchandise Purchases

3.
Prepare an income statement for the quarter ended September 30th. (Input all amounts as positive values except losses which should be indicated by a minus sign. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required.)

4.
Prepare a balance sheet as of September 30th. (Be sure to list the assets and liabilities in order of their liquidity. Do not round intermediate calculations.)

Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter.

a.
As of March 31 (the end of the prior quarter), the company’s balance sheet showed the following account balances:

Cash $ 10,000
Accounts receivable 40,000
Inventory 12,600
Buildings and equipment (net) 210,000
Accounts payable $ 16,800
Capital stock 150,000
Retained earnings 105,800

$ 272,600 $ 272,600

b. Actual sales for March and budgeted sales for April–July are as follows:

March (actual) $50,000
April $70,000
May $80,000
June $85,000
July $40,000

c.
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.

d. The company’s gross margin percentage is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
e.
Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $6,500 per month; shipping, 6% of sales; advertising, $5,000 per month; other expenses, 4% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $3,000 for the quarter.

f. Each month’s ending inventory should equal 30% of the following month’s cost of goods sold.
g.
Half of a month’s inventory purchases are paid for in the month of purchase and half in the following month.

h.
Equipment purchases during the quarter will be as follows: April, $9,500; and May, $6,000.

i. Dividends totaling $3,500 will be declared and paid in June.
j.
Management wants to maintain a minimum cash balance of $8,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:
Using the data above, complete the following statements and schedules for the second quarter:
1. Schedule of expected cash collections:

2a.
Merchandise purchases budget. (Input all amounts as positive values.)

2b.
Schedule of expected cash disbursements for merchandise purchases: (Leave no cells blank - be certain to enter "0" wherever required.)

3.

Schedule of expected cash disbursements for selling and administrative expenses:

4.
Cash budget. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Total Financing should be indicated with a minus sign when the company is repaying amounts that were previously borrowed.)

5.
Prepare an absorption costing income statement for the quarter ending June 30. (Input all amounts as positive values.)

6.
Prepare a balance sheet as of June 30. (Be sure to list the assets and liabilities in order of their liquidity.)