Estimated Balance SheetMarch 31, 2017Assets Cash$99,000 Accounts receivable 500,250 Raw materials in

Estimated Balance SheetMarch 31, 2017Assets Cash$99,000 Accounts receivable 500,250 Raw materials inventory 101,000 Finished goods inventory 402,500 Total current assets 1,102,750 Equipment, gross 618,000 Accumulated depreciation (159,000) Equipment, net 459,000 Total assets$1,561,750 Liabilities and Equity Accounts payable$209,700 Short-term notes payable 21,000 Total current liabilities 230,700 Long-term note payable 505,000 Total liabilities 735,700 Common stock 344,000 Retained earnings 482,050 Total stockholders’ equity 826,050 Total liabilities and equity$1,561,750

To prepare a master budget for April, May, and June of 2017, management gathers the following information:

  1. Sales for March total 23,000 units Forecasted sales in units are as follows: April, 23,000; May, 19,000; June, 18,800; and July, 23,000 Sales of 249,000 units are forecasted for the entire year The product’s selling price is $2900 per unit and its total product cost is $2500 per unit
  2. Company policy calls for a given month’s ending raw materials inventory to equal 50% of the next month’s materials requirements The March 31 raw materials inventory is 5,050 units, which complies with the policy The expected June 30 ending raw materials inventory is 4,500 units Raw materials cost $20 per unit Each finished unit requires 050 units of raw materials
  3. Company policy calls for a given month’s ending finished goods inventory to equal 70% of the next month’s expected unit sales The March 31 finished goods inventory is 16,100 units, which complies with the policy
  4. Each finished unit requires 050 hours of direct labor at a rate of $24 per hour
  5. Overhead is allocated based on direct labor hours The predetermined variable overhead rate is $360 per direct labor hour Depreciation of $24,320 per month is treated as fixed factory overhead
  6. Sales representatives’ commissions are 10% of sales and are paid in the month of the sales The sales manager’s monthly salary is $3,900
  7. Monthly general and administrative expenses include $10,000 administrative salaries and 08% monthly interest on the long-term note payable
  8. The company expects 25% of sales to be for cash and the remaining 75% on credit Receivables are collected in full in the month following the sale (none are collected in the month of the sale)
  9. 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
  10. The minimum ending cash balance for all months is $110,000 If necessary, the company borrows enough cash using a short-term note to reach the minimum Short-term notes require an interest payment of 1% at each month-end (before any repayment) If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance
  11. Dividends of $19,000 are to be declared and paid in May
  12. No cash payments for income taxes are to be made during the second calendar quarter Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter
  13. Equipment purchases of $139,000 are budgeted for the last day of June

Prepare the following budgets and other financial information as required All budgets and other financial information should be prepared for the second calendar quarter, except as otherwise noted below (Round calculations up to the nearest whole dollar, except for the amount of cash sales, which should be rounded down to the nearest whole dollar):

1 Sales budget

2 Production budget

3 Raw materials budget

4 Direct labor budget

5 Factory overhead budget

6 Selling expense budget

7 General and administrative expense budget

8 Cash budget

9 Budgeted income statement for the entire second quarter (not for each month separately)

10 Budgeted balance sheet

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