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Concept explainers
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2017, the following tentative
Cash............................................................. | $ 85,000 | |
125,600 | ||
Finished Goods................................................... | 69,300 | |
Work in Process................................................... | 32,500 | |
Materials......................................................... | 48,900 | |
Prepaid Expenses................................................. | 2,600 | |
Plant and Equipment.............................................. | 325,000 | |
$156,200 | ||
Accounts Payable................................................. | 62,000 | |
Common Stock, $10 par........................................... | 180,000 | |
290,700 | ||
$688,900 | $688,900 |
Factory output and sales for 2017 are expected to total 200,000 units of product, which are to be sold at $5.00 per unit. The quantities and costs of the inventories at December 31, 2017, are expected to remain unchanged from the balances at The beginning of the year.
Budget estimates of
Estimated Costs and Expenses | ||
Cost of goods manufactured and sold: | Fixed (Total for Year) | |
Direct materials................................................ | — | $1.10 |
Direct labor.................................................... | — | 0.65 |
Factory |
||
Depreciation of plant and equipment.......................... | $40,000 | — |
Other factory overhead....................................... | 12,000 | 0.40 |
Selling expenses: | ||
Sales salaries and commissions.................................. | 46,000 | 0.45 |
Advertising.................................................... | 64,000 | — |
Miscellaneous selling expense.................................. | 6,000 | 0.25 |
Administrative expenses: | ||
Office and officers salaries...................................... | 72,400 | 0.12 |
Supplies....................................................... | 5,000 | 0.10 |
Miscellaneous administrative expense........................... | 4,000 | 0.05 |
Balances, of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $30,000 on 2017 taxable income will be paid during 2017. Regular quarterly cash dividends of $0.15 per share are expected to be declared and paid in March, June, September, and December on 18,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $75,000 cash in May.
Instructions
- 1. Prepare a budgeted income statement for 2017.
- 2. Prepare a budgeted balance sheet as of December 31, 2017, with supporting calculations.
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Chapter 21 Solutions
Financial & Managerial Accounting
- QS 15-18 (Algo) Computing and recording over- or underapplied overhead LO P4 A company applies overhead at a rate of 170% of direct labor cost. Actual overhead cost for the current period is $1,081,900, and direct labor cost is $627,000. 1. Compute the under- or overapplied overhead. 2. Prepare the journal entry to close over- or underapplied overhead to Cost of Goods Sold. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the under- or overapplied overhead.arrow_forwardQuestion 6 During 2019, Bitsincoins Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, what is Bitsincoin's free cash flow? (3 marks)arrow_forwardQuestion 4 Waterfront Inc. wishes to borrow on a short-term basis without reducing its current ratio below 1.25. At present its current assets and current liabilities are $1,600 and $1,000 respectively. How much can Waterfront Inc. borrow? (5 marks)arrow_forward
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