5th Edition

ISBN: 9780134128528

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

Videos

Textbook Question

Chapter 9, Problem 9.59AP

Comprehensive summary problem (Learning Objectives 2 & 3)

Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores for $15 per birdfeeder. Each birdfeeder requires 1.5 board feet of wood, which the company obtains at a cost of $4 per board foot. The company would like to maintain an ending stock of wood equal to 10% of the next month’s production requirements. The company would also like to maintain an ending stock of finished birdfeeders equal to 20% of the next month’s sales.

Sales data for the company is as follows:

	Units
October actual sales (prior year)	92.000
November actual sales (prior year)	85.000
December actual sales (prior year)	78.000
January projected sales	80.000
February projected sales	90.000
March projected sales	95.000
April projected sales	105,000

In any given month, 20% of the total sales are cash sales, while the remainder are credit sales. The company’s collection history indicates that 80% of credit sales is collected in the month after the sale, 10% is collected two months after the sale, 6% is collected three months after the sale, and the remaining 4% is never collected.

Assume that the total cost of direct materials purchases in December was $550,000. The company pays 45% of its direct materials purchases in the month of purchase and pays the remaining 55% in the month after purchase.

Requirements

Prepare the following budgets for the first three months of the year, as well as a summary budget for the quarter:

1. Prepare the sales budget, including a separate section that details the type of sales made (cash versus credit).
2. Prepare the production budget.
3. Prepare the direct materials purchases budget. Assume the company needs 120,000 board feet of wood for production in April.
4. Prepare the cash collections budget for January, February, and March, as well as a summary for the first quarter.
5. Prepare the cash payments budget for direct materials purchases for the months of January, February, and March, as well as a summary for the first quarter.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 9, Problem 9.58AP

Chapter 9, Problem 9.60AP

Students have asked these similar questions

No wrong answer

L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Now assume that 5% of the L.L. Bean boots are returned by customers for various reasons. L. Bean has a 100% refund policy for returns, no matter what the reason. What would the journal entry be to accrue L.L. Bean's sales returns for this one pair of boots?

The following data were taken from the records of Splish Brothers Company for the fiscal year ended June 30, 2025. Raw Materials Inventory 7/1/24 $58,100 Accounts Receivable $28,000 Raw Materials Inventory 6/30/25 46,600 Factory Insurance 4,800 Finished Goods Inventory 7/1/24 Finished Goods Inventory 6/30/25 99,700 Factory Machinery Depreciation 17,100 21,900 Factory Utilities 29,400 Work in Process Inventory 7/1/24 21,200 Office Utilities Expense 9,350 Work in Process Inventory 6/30/25 29,400 Sales Revenue 560,500 Direct Labor 147,550 Sales Discounts 4,700 Indirect Labor 25,360 Factory Manager's Salary 63,400 Factory Property Taxes 9,910 Factory Repairs 2,500 Raw Materials Purchases 97,300 Cash 39,200 SPLISH BROTHERS COMPANY Income Statement (Partial) $

Chapter 9 Solutions

Managerial Accounting (5th Edition)

Ch. 9 - (Learning Objective 1) Which term describes the...Ch. 9 - (Learning Objective 1) Benefits of budgeting...Ch. 9 - Prob. 3QC Ch. 9 - Prob. 4QC Ch. 9 - Prob. 5QC Ch. 9 - Prob. 6QC Ch. 9 - Prob. 7QC Ch. 9 - Prob. 8QC Ch. 9 - Prob. 9QC Ch. 9 - Prob. 10QC

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.

Solution Summary: The author explains that the sales budget includes a separate section that details the type of sales made (cash versus credit).

Concept explainers

Videos

Want to see the full answer?

Chapter 9 Solutions