ACIS 2115 Lecture Notes - Lecture 14: Promissory Note, Accounts Receivable, Current Asset
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1 Dec 2019
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NABAR MANUFACTURING | ||||||||||
Estimated Balance Sheet | ||||||||||
30-Jun-15 | ||||||||||
Assets | Liabilities and Equity | |||||||||
Cash | 40,000 | Accounts payable | 51,400 | |||||||
Accounts receivable | 249,900 | Income taxes payable | 10,000 | |||||||
Raw materials inventory | 35,000 | Shirt-term notes payable | 24,000 | |||||||
Finished goods inventory | 241,080 | Total current liabilities | 85,400 | |||||||
Total Current assets | 565,980 | Long-term note payable | 300,000 | |||||||
Equipment, gross | 720,000 | Total liabilities | 385,400 | |||||||
Accumulated depreciation | (240,000) | Common stock | 600,000 | |||||||
Equipment, net | 480,000 | Retained earnings | 60,580 | |||||||
Total stockholders' equity | 660,580 | |||||||||
Total Assets | 1,045,980 | Total liabilities and equity | 1,045,980 | |||||||
To prepare amaster budget for July, August and September 2015, managementgathers the following information: | ||||||||||||
a. | Sales were 20,000 units in June. Forecasted salesin units are as follows: July, 21,000; August, 19,000;September, | |||||||||||
20,000; October, 24,000. The product's sellingprice is $17 per unit and its total product cost is $14.35 perunit. | ||||||||||||
b. | Company policy calls for a given month's endingfinished goods inventory to equal 70% of the next month'sexpected | |||||||||||
unit sales. The June 30 finished goods inventoryis 16,800 units, which does not comply with the policy. | ||||||||||||
c. | Company policy calls for a given month's endingraw materials inventory to equal 20% of the next month'smaterial | |||||||||||
requirements. The June 30 raw materials inventoryis 4,375 units (which also fails to meet the policy). Thebudgeted | ||||||||||||
September 30 raw materials inventory is 1,980units. Raw materials cost $8 per unit. Each finished unitrequires | ||||||||||||
.50 units of raw materials. | ||||||||||||
d. | Each finished unit requires 0.50 hours of directlabor at a rate of $16 per hour. | |||||||||||
e. | 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 istreated as fixed factory overhead. | ||||||||||||
f. | Monthly general and administrative expensesinclude $9,000 administrative salaries and .9% monthly interest onthe | |||||||||||
long-term note payable. | ||||||||||||
g. | Sales representatives' commissions are 10% ofsales and are paid in the month of the sales. The sales manager'ssalary | |||||||||||
is $3,500 per month. | ||||||||||||
h. | The company expects 30% of sales to be for cashand the remaining 70% on credit. Receivables are collected in fullin | |||||||||||
the month following the sale (none is collected inthe month of the sale). | ||||||||||||
i. | All raw materials purchases are on credit, and nopayables arise from any other transactions. One month's rawmaterials | |||||||||||
purchases are fully paid in the next month. | ||||||||||||
j. | Dividends of $20,000 are to be declared and paid inAugust. | |||||||||||
k. | Income taxes payable at June 30 will be paid inJuly. Income tax expense will be assessed at 35% in the quarter andpaid | |||||||||||
in October. | ||||||||||||
l. | Equipment purchases of $100,000 are budgeted forthe last day of September | |||||||||||
m. | The minimum ending cash balance for all months is$40,000. If necessary, the company borrows enough cash using ashort- | |||||||||||
term note to reach the minimum. Short-term notesrequire an interest payment of 1% at each month-end (beforeany | ||||||||||||
repayment). If the ending cash balance exceeds theminimum, the excess will be applied to repaying the short-termnotes | ||||||||||||
payable balance. | ||||||||||||
Prepare a masterbudget for NABAR Manufacturing for the period ending September2015. |