Exercise 5-30
Bill Thomas, Vaughn & Hill’s controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The company’s balance sheet of December 31 is as follows:
| Cash | $ 49,200 | ||
| Accounts Receivable (net) | 47,970 | ||
| Finished Goods Inventory | 40,180 | ||
| Raw Materials Inventory | 6,199 | ||
| Property, Plant & Equipment | 246,000 | ||
| Accumulated Depreciation | (61,500 | ) | |
| Total Assets | $328,049 | ||
| Accounts Payable | $ 14,760 | ||
| Income Tax Payable | 61,713 | ||
| Common Stock | 82,000 | ||
| Retained Earnings | 169,576 | ||
| Total Liabilities & Owners Equity | $328,049 |
| Selected Estimates | Quarter | ||
| Budgeted revenue |
$1,156,200 |
||
| Selling and administrative expense | 218,448 | ||
| Interest expense | 2,772 | ||
| Cash | 25,236 | ||
| Cost of Goods Sold | 822,763 | ||
| Accounts receivable (net) | 111,930 | ||
| Direct materials | 4,559 | ||
| Finished goods | 48,392 | ||
| Acounts payable | 27,224 | ||
| Notes payable | 33,620 |
Additional Information:
| ● | Bates & Hill plans to declare and pay dividends totaling $40,180 in January. | |
| ● | Bates & Hill plans to purchase and pay cash for a piece of land in February at a cost of $59,040. | |
| ● | Bates & Hill plans to purchase equipment in March at a cost of $49,200. | |
| ● | Depreciation for manufacturing overhead $24,600 per month and for selling and administrative $8,200 per month. |
The company expects a 25% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.
