Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
26th Edition
ISBN: 9781305392373
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 22, Problem 22.22EX
Capital expenditures budget
On January 1, 2016, the controller of Omicron Inc. is planning capital expenditures for the years 2016-2019. 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 2015 for the construction of a new factory building at a contract cost of $ 10,000,000. The construction is scheduled to begin in 2016 and be completed in 2017.
Vice President of Manufacturing: Once the new factory building is finished, we plan to purchase $ 1 .5 million in equipment in late 2017. I expect that an additional $200,000 will be needed early in the following year (2018) 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 2019.
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 2019 by at least 35%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, 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 2018, 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 2016-2019.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
agenow.com/ilrn/takeAssignment/takeAssignmentMain.do?inprogress=true
to
eBook
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…
Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for
April
2024
and budgeted balance sheet at
April
30,
2024.
The
March
31,
2024,
balance sheet follows:
As
Tune
Printing Supply's controller, you have assembled the following additional information:
a.
April
dividends of
$6,000
were declared and paid.
b.
April
capital expenditures of
$16,200
budgeted for cash purchase of equipment.
c.
April
depreciation expense,
$500.
d.
Cost of goods sold,
45%
of sales.
e.
Desired ending inventory for
April
is
$22,800.
f.
April
selling and administrative expenses include salaries of
$32,000,
30%
of which will be paid in cash and the remainder paid next month.
g.
Additional
April
selling and administrative expenses also include miscellaneous expenses of
15%
of sales, all paid in
April.
h.
April
budgeted sales,
$86,000,
50%
collected in
April
and
50%
in
May.
i.
April…
Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for
April
2024
and budgeted balance sheet at
April
30,
2024.
The
March
31,
2024,
balance sheet follows:
As
Tune
Printing Supply's controller, you have assembled the following additional information:
a.
April
dividends of
$6,000
were declared and paid.
b.
April
capital expenditures of
$16,200
budgeted for cash purchase of equipment.
c.
April
depreciation expense,
$500.
d.
Cost of goods sold,
45%
of sales.
e.
Desired ending inventory for
April
is
$22,800.
f.
April
selling and administrative expenses include salaries of
$32,000,
30%
of which will be paid in cash and the remainder paid next month.
g.
Additional
April
selling and administrative expenses also include miscellaneous expenses of
15%
of sales, all paid in
April.
h.
April
budgeted sales,
$86,000,
50%
collected in
April
and
50%
in
May.
i.
April…
Chapter 22 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
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 - Prob. 22.1APECh. 22 - Flexible budgeting At the beginning of the period,...Ch. 22 - Prob. 22.2APECh. 22 - Production budget Magnolia Candle Inc. projected...Ch. 22 - Direct materials purchases budget MyLife...Ch. 22 - Direct materials purchases budget Magnolia Candle...Ch. 22 - Prob. 22.4APECh. 22 - Direct labor cost budget Magnolia Candle Inc....Ch. 22 - Prob. 22.5APECh. 22 - Cost of goods sold budget Prepare a cost of goods...Ch. 22 - Prob. 22.6APECh. 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 True Tab Inc. produces a small...Ch. 22 - Sales and production budgets SoundLab Inc....Ch. 22 - Professional fees earned budget for a service...Ch. 22 - Prob. 22.8EXCh. 22 - Direct materials purchases budget Romano's Frozen...Ch. 22 - Prob. 22.10EXCh. 22 - Prob. 22.11EXCh. 22 - Prob. 22.12EXCh. 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 Delaware 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, 2016,...Ch. 22 - Forecast sales volume and sales budget For 2016,...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 - Prob. 22.2CPCh. 22 - Static budget for a service company A bank manager...Ch. 22 - Objectives of the master budget Dominos Pizza...Ch. 22 - Integrity and evaluating budgeting systems The...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Capital expenditures budget On August 1, 20Y4. the controller of Handy Dan Tools Inc. is planning capital expenditures for the years 20Y5-20Y8. The controller interviewed several Handy Dan executives to collect the necessary information for the capital expenditures budget. Excerpts of the interviews are as follows: Director of Facilities: A construction contract was signed in May 20Y4 for the construction of a new factory building at a contract cost of $9,000,000. The construction is scheduled to begin in 20Y5 and completed in 20Y6. Vice President of Manufacturing: Once the new factor)' building is finished, we plan to purchase $3-6 million in equipment in late 20Y6. I expect that an additional $500,000 will lx-needed early in the following year (20Y7) to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another half million in equipment in 20Y8. Vice President of Marketing: 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 25%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, 1 would expect the cost of the expansion to Ik- 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 20Y7, once the factor)' is up and running, we should equip the whole facility with wireless technology. I think it would cost us $400,000 today to install the technology. However, prices have been dropping by 10% per year, so it should be less expensive at a later date. President: I am excited about our long-term prospects. My only short-term concern is financing the $5,000,000 of construction costs on the portion of the new factor)' building scheduled to be completed in 20Y5. Use the interview information above to prepare a capital expenditures budget for Handy Dan Tools Inc. for the years 20Y5-20Y8.arrow_forwardTune Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for April 2024 and budgeted balance sheet at April 30, 2024. The March 31, 2024, balance sheet follows: As Tune Printing Supply's controller, you have assembled the following additional information: a. April dividends of $6,000 were declared and paid. b. April capital expenditures of $16,200 budgeted for cash purchase of equipment. c. April depreciation expense, $500. d. Cost of goods sold, 45% of sales. e. Desired ending inventory for April is $22,800. f. April selling and administrative expenses include salaries of $32,000, 30% of which will be paid in cash and the remainder paid next month. g. Additional April selling and administrative expenses also include miscellaneous expenses of 15% of sales, all paid in April. h. April budgeted sales, $86,000, 50% collected in April and 50% in May. i. April cash payments of…arrow_forwardRelevant data from the operating budget of The Framers are: Other data: Capital assets were sold in quarter 1 and $8,000 was collected in quarter 1 and $500 collected in quarter 2. Dividends of $500 will be paid in May The beginning cash balance was $50,000 and a required minimum cash balance is $10,000. Prepare a cash budget for the first two quarters of the year.arrow_forward
- Preparing a financial budget—budgeted income statement and balance sheet Ballentine Company has the following post-closing trial balance on December 31, 2018: The company’s accounting department has gathered the following budgeting information for the first quarter of 2019: Additional information: Direct materials purchases are paid 50% in the quarter purchased and 50%, in the next quarter. Direct labor, ma following budgeted income statement nufacturing overhead selling and administrative costs, and income tax expense are paid in the quarter incurred. Accounts payable at December 31, 2018 are paid in the first quarter of 2019. Requirements Prepare Ballentine Company’s budgeted income statement for the first quarter of 2019. Prepare Ballentine Company’s budgeted balance sheet as of March 31, 2019.arrow_forwardThe controller of Arrowroot Company wishes to improve the company’s control system by preparing a monthly cash budget. The following information relates to the month ending July 31, 2021: June 30, 2021, cash balance $ 122,000 Dividends were declared on June 15* 40,000 Cash expenditures to be paid in July for operating expenses 81,600 Depreciation expense 12,200 Cash collections to be received 194,000 Merchandise purchases to be paid in cash 120,400 Equipment to be purchased for cash 45,800 Arrowroot Company wishes to maintain a minimum cash balance of 62,000 *Dividends are payable to shareholders of record on declaration date, 30 days after declaration. Required: 1. Prepare a cash budget for the month ended July 31, 2021, indicating how much, if anything, Arrowroot will need to borrow to meet its minimum cash requirement. Leave no cells blank - be certain to enter "0" wherever requiredarrow_forward1. Prepare Grayson's operating budget and cash budget for 2025 by quarter. Required schedules and budgets include: sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, cost of goods sold budget, selling and administrative expense budget, schedule of cash receipts, schedule of cash payments, and cash budget. Manufacturing overhead costs are allocated based on direct labor hours. Round all calculations to the nearest dollar. 2. Prepare Grayson's annual financial budget for 2025, including budgeted income statement and budgeted balance sheet. --------------------------------------------------------------------------------------------------------------------- The Grayson Tire Company manufactures racing tires for bicycles. Grayson sells tires for $70 each. Grayson is planning for the next year by developing a master budget by quarters. Grayson's balance sheet for December 31, 2024, is as follows: Grayson…arrow_forward
- Current Attempt in Progres Bramble Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2022. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours. The master overhead budget was prepared in the expectation that 475, 800 direct labor hours will be worked during the year. In June, 39,800 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable - per direct labor hour: indirect labor $0.48, indirect materials $0.49, factory utilities $0.34, and factory repairs $0.27. Fixed: same as budgeted (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2022, assuming production levels range from 44,200 to 57, 100 direct labor hours. Use increments of 4,300 direct labor hours. (List variable costs…arrow_forward8arrow_forwardRequired information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below: Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity $ 94,000 145,000 59,400 222,000 $520,400 $ 83,000 331,000 106,400 $ 520,400 Beech's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $330,000 $350,000, $340,000, and $360,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the…arrow_forward
- Required information [The following information applies to the questions displayed below.] Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown in the picture provided: Beech's managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $360,000, $380,000, $370,000, and $390,000, respectively. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of…arrow_forwardPLEASE USE MS WORD Another team member who is preparing the Budgeted Balance Sheet for the business for the same quarter and has asked you to furnish him with the figures for the expected trade receivables and payables to be included in the statement at December 31, 2021. Is that a reasonable request? If yes, what should these amounts be?arrow_forwardPrepare the following three-months (January to March 2021) budget as required by the bankers. The Cash Collection Schedule for sales The Cash Payment Schedule for purchases The budgeted income statement The budgeted statement of financial position/ Balance Sheet The cash budgetarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY