Take Home Problem Corrected 1

Topics: Balance sheet, Accounts receivable, Generally Accepted Accounting Principles Pages: 2 (551 words) Published: April 24, 2015
Problem 1 – Master Budget

Video Company, Inc., produces and markets two popular video games, High Ranger and Star Bounder. The closing account balances on the company’s balance sheet for last year are as follows: Cash, $18,735; Accounts Receivable, $19,900; Materials Inventory, $18,510; Work in Process Inventory, $24,680; Finished Goods Inventory, $21,940; Prepaid Expenses, $3,420; Plant and Equipment, $262,800; Accumulated Depreciation-Plant and Equipment, $55,845; Other Assets, $9,480; Accounts Payable, $52,640; Mortgage Payable, $70,000; Common Stock, $90,000; and Retained Earnings, $110,980.

Operating budgets for the first quarter of the coming year show the following estimated costs: direct materials purchases, $58,100; direct materials usage, $62,400; direct labor expense, $42,880; overhead, $51,910; selling expenses, $35,820; general and administrative expenses, $60,240; cost of goods manufactured, $163,990; and cost of goods sold, $165,440.

Sales are projected to be $125,200 in January, $105,100 in February, and $112,600 in March. Accounts receivable are expected to double during the quarter, and accounts payable are expected to decrease by 20%. Mortgage payments for the quarter will total $6,000, of which $2,000 will be interest expense. Prepaid expenses are expected to go up by $20,000, and other assets are projected to increase by 50% over the budget period. Depreciation for plant and equipment (already included in the overhead budget) averages 5% of total plant and equipment per year. Federal income taxes (30% of profits) are payable in April. The company pays no dividends.

REQUIRED

1. Determine the March 31 ending balances of Materials Inventory, Work in Process Inventory and Finished Goods inventory. 2. Prepare a budgeted income statement for the quarter ended March 31. 3. Prepare a budgeted balance sheet as of March 31.

Problem 2 – Cash Budget

Calgon Products, a distributor of organic beverages, needs a cash budget...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Take Home exam 1 Essay
  • Take home Exam 1 Essay
  • Essay about Take Home
  • Take Home Essay 1
  • Essay about Problem Set 1
  • BSHE 500 Take Home Exam 1 Essay
  • Fsu Mktg 476 Take Home 1 Essay
  • Problem 1 Essay

Become a StudyMode Member

Sign Up - It's Free