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Concept explainers
1.
To prepare: Sale budget of I Corporation.
1.
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Explanation of Solution
Statement that shows the sales budget of I Incorporation
I Incorporation | ||||
Sales Budget | ||||
Particulars | January ($) | February ($) | March ($) | Total ($) |
Sales unit (A) | 6,000 | 8,000 | 10,000 | 24,000 |
Selling price Per unit (B) | 45 | 45 | 45 | 45 |
Total sales | 270,000 | 360,000 | 450,000 | 1,080,000 |
Table (1) |
2.
To prepare: Purchase budget of I Corporation.
2.
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Explanation of Solution
Statement that shows the purchase budget of I Incorporation
Table (2)
3.
To prepare: Selling expense budget of I Incorporation.
3.
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Explanation of Solution
Statement that shows the selling expense budget of I Incorporation,
Table (3)
4.
To prepare: General and administrative expense budget of I Incorporation.
4.
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Explanation of Solution
Statement that shows the General and administrative expense budget of I Incorporation
Table (4)
5.
To prepare: Capital expenditure budget of I Incorporation.
5.
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Explanation of Solution
Statement that shows the capital expenditure budget of I Incorporation
Table (5)
6.
To prepare:
6.
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Explanation of Solution
Statement that shows the Cash budget of I Incorporation
Table (6)
Working Notes:
Calculation of expected cash collection
Table (7)
7.
To prepare:
7.
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Explanation of Solution
Prepare income statement.
I Incorporation | ||||
Income Statement | ||||
For three months ended March 31,2018 | ||||
Particulars | Amount ($) | Amount ($) | ||
Sales | 1,080,000 | |||
Less: Cost of goods sold | 720,000 | |||
Gross profit | 360,000 | |||
Less: Operating expenses | ||||
Total selling expense | 238,500 | |||
General administrative salary | 45,000 | |||
21,425 | ||||
Total operating expense | 304,925 | |||
Earnings before taxes (A) | 55,075 | |||
Less: Income tax | 22,030 | |||
Net income | 33,045 | |||
Table (8) |
Thus, budgeted net income of I Incorporation is $33,045.
8.
To prepare: Budgeted
8.
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Explanation of Solution
Prepare balance sheet
I Incorporation | ||||
Balance sheet | ||||
For three months ended March 31,2018 | ||||
Particulars | Amount ($) | |||
Assets | ||||
Cash | 36,000 | |||
445,500 | ||||
Inventory | 67,500 | |||
Total current assets | 549,000 | |||
Equipment | 647,875 | |||
Land | 150,000 | |||
Net equipment | ||||
Total Assets | 1,346,875 | |||
Liabilities and | ||||
Liabilities | ||||
Accounts Payable | 496,500 | |||
Bank loan payable | 76,800 | |||
Income tax payable | 22,030 | |||
Total liabilities | 595,330 | |||
Stockholder’s Equity | ||||
Common Stock | 472,500 | |||
279,045 | ||||
Total stockholders’ equity | 751,545 | |||
Total Liabilities and Stockholder’s equity | 1,346,875 | |||
Table (9) |
Working note:
Calculation of retained earnings,
Hence, the total of the balance sheet of the D Company as on March 31, 2018 is of $1,568,650.
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Chapter 7 Solutions
Managerial Accounting
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