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Solve Adjustments Given Outside Of Balance Sheet

Question

Peyton Approved

Budgeted Balance Sheet

30-Jun-15

ASSETS

 

Cash

 

$42,000

 

Accounts receivable

 

259,900

 

Raw materials inventory

 

35,650

 

Finished goods inventory

241,080

 

Total current assets

 

578,630

 

Equipment

$720,000

   

Less accumulated depreciation

240,000

480,000

 

Total assets

 

$1,058,630

 
       

LIABILITIES AND EQUITY

 

Accounts payable

 

$63,400

 

Short-term notes payable

 

24,000

 

Taxes payable

 

10,000

 

Total current liabilities

 

97,400

 

Long-term note payable

 

300,000

 

     Total Liabilities

 

397,400

 

Common stock

$600,000

   

Retained earnings

   61,230

   

Total stockholders’ equity

 

661,230

 

Total liabilities and equity

 

$1,058,630

 

 

  1. Sales were 20,000 units in June 2015. Forecasted sales in units are as follows: July, 18,000; August, 22,000; September, 20,000; October, 24,000. The sales price per unit is $18.00 and its total product cost is $14.35 per unit.
  2. The June 30 finished goods inventory is 16,800 units.
  3. Going forward, Company policy calls for a given month's ending finished goods inventory to equal 70% of the next month's expected unit sales
  4. The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls for a given month's ending raw materials inventory to equal 20% of the next month's materials requirements.
  5. Each finished unit requires 0.50 hours of direct labor at a rate of $16 per hour.
  6. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $1.35 per direct labor hour. Depreciation of $20,000 per month is treated as fixed factory overhead.
  7. Monthly general and administrative expenses include $12,000 administrative salaries and 0.9% monthly interest on the long-term note payable.
  8. Sales commissions are 12% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,750 per month.
  9. The company expects 40% of sales to be for cash and the remaining 60% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale).
  10. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month.
  11. Dividends of $25,000 are to be declared and paid in August.
  12. Income taxes payable at June 30 will be paid in July. Income tax expense will be assessed at 35% in the quarter and paid in October.
  13. Equipment purchases of $120,000 are budgeted for the last day of September.

 

Summary

The question belongs to Accounting and it discusses about solving the questions or adjustments given outside of the balance sheet as additional information.

Total Word Count 1171

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