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Solution Library
Solve Adjustments Given Outside Of Balance Sheet
Question
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Peyton Approved |
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Budgeted Balance Sheet |
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30-Jun-15 |
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ASSETS |
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Cash |
$42,000 |
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Accounts receivable |
259,900 |
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Raw materials inventory |
35,650 |
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Finished goods inventory |
241,080 |
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Total current assets |
578,630 |
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Equipment |
$720,000 |
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Less accumulated depreciation |
240,000 |
480,000 |
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Total assets |
$1,058,630 |
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LIABILITIES AND EQUITY |
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Accounts payable |
$63,400 |
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Short-term notes payable |
24,000 |
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Taxes payable |
10,000 |
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Total current liabilities |
97,400 |
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Long-term note payable |
300,000 |
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Total Liabilities |
397,400 |
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Common stock |
$600,000 |
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Retained earnings |
61,230 |
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Total stockholders’ equity |
661,230 |
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Total liabilities and equity |
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$1,058,630 |
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- Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The sales price per unit is $18.00 and its total product cost is $14.35 per unit.
- The June 30 finished goods inventory is 16,800 units.
- Going forward, Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales
- The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements.
- Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour.
- Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead.
- Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable.
- Sales commissions are 12% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,750 per month.
- The company expects 40% of sales to be for cash and the remaining 60% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale).
- All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month.
- Dividends of $25,000 are to be declared and paid in August.
- Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid in October.
- Equipment purchases of $120,000 are budgeted for the last day of September.
Summary
The question belongs to Accounting and it discusses about solving the questions or adjustments given outside of the balance sheet as additional information.
Total Word Count 1171
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