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Concept explainers
2.
To prepare: Production budget of N manufacturing.
2.
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Explanation of Solution
Statement that shows the Production budget of N manufacturing
Table (2)
3.
To prepare: Raw material budget of N manufacturing.
3.
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Explanation of Solution
Statement that shows the raw material budget of N manufacturing
Table (3)
4.
To prepare: Direct labor budget of N manufacturing.
4.
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Explanation of Solution
Statement that shows the direct labor budget of N manufacturing
Table (4)
5.
To prepare: Factory
5.
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Explanation of Solution
Statement that shows the factory overhead budget of N manufacturing
Table (5)
6.
To prepare: Selling expense budget of N manufacturing.
6.
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Explanation of Solution
Statement that shows the selling expense budget of N manufacturing
Table (6)
7.
To prepare: General and administrative expense budget of N manufacturing.
7.
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Explanation of Solution
Statement that shows the General and administrative expense budget of N manufacturing
Table (7)
8.
To prepare:
8.
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Explanation of Solution
Statement that shows the Cash budget of N manufacturing
Table (8)
Working note:
Table (9)
9.
To prepare:
9.
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Explanation of Solution
Prepare income statement.
N. Manufacturing | ||||
Income Statement | ||||
For three months ended September 30,2017 | ||||
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, budgeted net income of N manufacturing is $7,254.
10.
To prepare: Budgeted
10.
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Explanation of Solution
Prepare balance sheet
N. Manufacturing | ||||
Balance sheet | ||||
For three months ended September 30,2017 | ||||
Particulars | Amount ($) | |||
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:
Calculation of retained earnings,
Hence, the total of the balance sheet of the N Manufacturing as on September 30, 2017 is of $1,054,920.
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Chapter 7 Solutions
Managerial Accounting + Connect Access Card
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