ACCOUNTING (LOOSELEAF)-W/STD.GDE+ACCESS
27th Edition
ISBN: 9781337692298
Author: WARREN
Publisher: CENGAGE L
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Chapter 22, Problem 22.22EX
Capital expenditures budget
On January 1, 20Y2, the controller of Omicron Inc. is planning capital expenditures for the years 20Y2-20Y5. The following interviews helped the controller collect the necessary information for the capital expenditures budget:
Director of Facilities A construction contract was signed in late 20Y1 for the construction of a new factory building at a contract cost of $10,000,000. The construction is scheduled to begin in 20Y2 and be completed in 20Y3.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $15 million m equipment in late 20Y3. I expect that an additional $200,000 will be needed early in the following year (20Y4) to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another $1,000,000 in equipment in 20Y5.
Chief Operating Officer: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in 20YS by at least 35%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years In addition. I would expect the cost of the expansion to be proportional to the size of the expansion.
Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn't make sense to do this until after the new factory building is completed and producing product. During 20Y4, once the factory is up and running, we should equip the whole facility with wireless technology. I think it would cost us $800,000 today to install the technology. However, prices have been dropping by 25% per year, so it should be less expensive at a later date.
Chief Financial Officer: I am excited about our long-term prospects. My only short-term concern is managing our
Use this interview information to prepare a capital expenditures budget for Omicron Inc. for the years 20Y2-20Y5.
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Capital Expenditures Budget
On January 1, 20Y6, the controller of Omicron Inc. is planning capital expenditures for the years 20Y6-20Y9. The following interviews helped th
controller collect the necessary information for the capital expenditures budget:
Director of Facilities: A construction contract was signed in late 20Y5 for the construction of a new factory building at a contract cost of $10,000,
The construction is scheduled to begin in 20Y6 and be completed in 20Y9.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $1.5 million in equipment in late 20Y7. I expect th
additional $200,000 will be needed early in the following year (20Y8) to test and install the equipment before we can begin production. If sales cc
to grow, I expect we'll need to invest another $1,000,000 in equipment in 20Y9.
Chief Operating Officer: We have really been growing lately. I…
The City of Bedford Falls debt service fund budgeted $150,000 (2 payments of $75,000) for interest and an annual principal payment of $500,000. Funding will be transferred from the general fund at the time payments are to be made. Interest payments will be December 15 and June 15. Principal will be paid on June 15. Journalize the budget for July 1 Journal any necessary December 15 entry(ies) What is the amount of accrued interest to be recorded in the Debt Service Fund at June 30?
Fairview Medical Supply has applied for a loan. First American Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Fairview Medical Supply's controller, you have assembled the following information:
a.
March 31 equipment balance, $52,700; accumulated depreciation, $41,100.
b.
April capital expenditures of $42,700 budgeted for cash purchase of equipment.
c.
April depreciation expense, $500.
d.
Cost of goods sold, 60% of sales.
e.
Other April operating expenses, including income tax, total $13,400, 30%of which will be paid in cash and the remainder accrued at April 30.
f.
March 31 owners' equity, $93,600.
g.
March 31 cash balance, $40,100.
h.
April budgeted sales, $91,000, 70% of which is for cash. Of the remaining
30%, half will be collected in April and half in May.
i.
April cash collections on March sales, $29,200.
j.
April cash payments of March 31 liabilities incurred…
Chapter 22 Solutions
ACCOUNTING (LOOSELEAF)-W/STD.GDE+ACCESS
Ch. 22 - Prob. 22.1DQCh. 22 - Briefly describe the type of human behavior...Ch. 22 - What behavioral problems are associated with...Ch. 22 - What behavioral problems are associated with...Ch. 22 - Under what circumstances is a static budget...Ch. 22 - How do computerized budgeting systems aid firms in...Ch. 22 - Why should the production requirements set forth...Ch. 22 - Why should the timing of direct materials...Ch. 22 - a. Discuss the purpose of the cash budget. b. If...Ch. 22 - Prob. 22.10DQ
Ch. 22 - Flexible budgeting At the beginning of the period,...Ch. 22 - Flexible budgeting At the beginning of the period,...Ch. 22 - Production budget Daybook Inc. projected sales of...Ch. 22 - Prob. 22.2BPECh. 22 - Direct materials purchases budget Daybook Inc....Ch. 22 - Direct materials purchases budget Magnolia Candle...Ch. 22 - Direct labor cost budget Daybook Inc. budgeted...Ch. 22 - Direct labor cost budget Magnolia Candle Inc....Ch. 22 - Cost of goods sold budget Prepare a cost of goods...Ch. 22 - Cost of goods sold budget Prepare a cost of goods...Ch. 22 - Cash budget Daybook Inc. collects 30% of its sales...Ch. 22 - Cash budget Magnolia Candle Inc. pays 10% of its...Ch. 22 - Personal budget At the beginning of the school...Ch. 22 - Flexible budget for selling and administrative...Ch. 22 - Static budget versus flexible budget The...Ch. 22 - Flexible budget for Assembly Department Steelcase...Ch. 22 - Production budget Weightless Inc. produces a small...Ch. 22 - Sales and production budgets Sonic Inc....Ch. 22 - Professional fees earned budget for a service...Ch. 22 - Professional labor cost budget for a service...Ch. 22 - Direct materials purchases budget Lorenzo's Frozen...Ch. 22 - Prob. 22.10EXCh. 22 - Direct materials purchases budget Anticipated...Ch. 22 - Direct labor cost budget MatchPoint Racket Company...Ch. 22 - Direct labor budget for a service business...Ch. 22 - Production and direct labor cost budgets Levi...Ch. 22 - Factory overhead cost budget Sweet Tooth Candy...Ch. 22 - Cost of goods sold budget Wilmington Chemical...Ch. 22 - Cost of goods sold budget The controller of...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash collections of accounts...Ch. 22 - Schedule of cash payments for a service company...Ch. 22 - Schedule of cash payments for a service company...Ch. 22 - Capital expenditures budget On January 1, 20Y2,...Ch. 22 - Forecast sales volume and sales budget For 20Y6,...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Cash budget The controller of Sonoma Housewares...Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Forecast sales volume and sales budget Sentinel...Ch. 22 - Sales, production, direct materials purchases, and...Ch. 22 - Budgeted income statement and supporting budgets...Ch. 22 - Cash budget The controller of Mercury Shoes Inc....Ch. 22 - Budgeted income statement and balance sheet As a...Ch. 22 - Prob. 22.1CPCh. 22 - Communication The city of Milton has an annual...Ch. 22 - Prob. 22.4CPCh. 22 - Static budget for a service company A bank manager...Ch. 22 - Objectives of the master budget Dominos Pizza...
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