
Concept explainers
1.
To prepare:
The sales budget of N manufacturing.
1.

Explanation of Solution
Prepare the sales budget as shown below.
Sales Budget | ||||
---|---|---|---|---|
Particulars | July ($) |
August ($) | September ($) |
Total ($) |
Sales unit (A) | 21,000 | 19,000 | 20,000 | 60,000 |
Selling price per unit (B) | 17 | 17 | 17 | 17 |
Total sales |
357,000 | 323,000 | 340,000 | 1,020,000 |
Table - 1
2.
To prepare:
The production budget of N Manufacturing.
2.

Explanation of Solution
Prepare the production budget as shown below.
Table - 2
3.
To prepare:
The raw materials budget of N Manufacturing.
3.

Explanation of Solution
Prepare the raw materials budget of N Manufacturing as shown below.
Table - 3
4.
To prepare:
The direct labor budget of N Manufacturing.
4.

Explanation of Solution
Prepare the direct labor budget of N Manufacturing as shown below.
Table - 4
5.
To prepare:
The factory
5.

Explanation of Solution
Prepare the factory overhead budget of N Manufacturing as shown below.
Table - 5
6.
To prepare:
The selling expense budget of N Manufacturing.
6.

Explanation of Solution
Prepare the selling expense budget of N Manufacturing as shown below.
Table - 6
7.
To prepare:
The general and administrative expense budget of N Manufacturing.
7.

Explanation of Solution
Prepare the general and administrative expense budget of N Manufacturing as shown below.
Table - 7
8.
To prepare:
The
8.

Explanation of Solution
Prepare the cash budget as shown below.
Table - 8
Working note:
Calculate the cash receipts.
Table (9)
9.
To prepare:
The
9.

Explanation of Solution
Prepare the budgeted income statement as shown below.
Income Statement | ||
---|---|---|
For three months ended September 30, 2015 | ||
Particulars | Amount ($) | Amount ($) |
Sales | 1,020,000 | |
Less: Cost of goods sold | 861,000 | |
Gross profit | 159,000 | |
Less: Operating expenses | ||
Sales commission | 102,000 | |
Sales salaries | 10,500 | |
General administrative salary | 27,000 | |
Total operating expense | 139,500 | |
Earnings before interest and taxes | 19500 | |
Less: Interest on long term notes | 8100 | |
Interest on short term note | 240 | |
Earnings before taxes (A) | 11,160 | |
Less: Income tax | 3,906 | |
Net income | 7,254 |
Table - 10
Thus, the budgeted net income of N Manufacturing is $7,254.
10.
To prepare:
The budgeted
10.

Explanation of Solution
Prepare the balance sheet as shown below.
Balance sheet | ||
---|---|---|
For three months ended September 30, 2015 | ||
Particulars | Amount ($) | Amount ($) |
Assets | ||
Cash | 40,000 | |
238,000 | ||
Raw material inventory | 15,840 | |
Finished goods inventory | 241,080 | |
Total current assets | 534,920 | |
Equipment | 820,000 | |
Less: |
300,000 | |
Net equipment | 520,000 | |
Total assets | 1,054,920 | |
Liabilities and |
||
Liabilities | ||
Accounts payable | 88,800 | |
Bank loan payable | 14,380 | |
Income tax payable | 3,906 | |
Total current liability | 107,086 | |
Long term note payables | 300,000 | |
Total liabilities | 407,086 | |
Stockholder’s equity | ||
Common stock | 600,000 | |
47,834 | ||
Total stockholders’ equity | 647,834 | |
Total liabilities and stockholder’s equity | 1,054,920 |
Table - 11
Working note:
1. Calculate the retained earnings.
Hence, the total amount appearing in the balance sheet of N Manufacturing as on September 30, 2015 is $1,054,920.
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