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acc206 week 4 problem 1

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Question;1. Comprehensive budgetingThe balance sheet of Williams Company as of December 31, 20X8, follows.WILLIAMS COMPANYBalance SheetDecember 31, 12X8AssetsCash$4,595Accounts receivable10,000Finished goods (575 units x $7.00)4,025Direct materials (2,760 units x $0.50)1,380Plant & equipment$50,000Less: Accumulated depreciation10,00040,000Total assets$60,000Liabilities & Stockholders' EquityAccounts payable to suppliers$14,000Common stock$25,000Retained earnings21,00046,000Total liabilities &. stockholders' equity$60,000The following information has been extracted from the firm's accounting records:1. All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale, the remaining 40% are collected in the following month. Forecasted sales for the first five months of 20X9 are: January, 1,600 units,- February, 1,700 units, March, 1,900 units, April, 2,100 units, May, 2,200 units.2. Management wants to maintain the finished goods inventory at 30% of the following month's sales.3. Williams uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next six months. Management wants to maintain the ending direct materials inventory at 60% of the following month's production needs.4. Seventy percent of all purchases are paid in the month of purchase, the remaining 30% are paid in the subsequent month.5. Williams? product requires 30 minutes of direct labor time. Each hour of direct labor costs $9.Instructions:a. Rounding computations to the nearest dollar, prepare the following for January through March:1) Sales budget2) Schedule of cash collections3) Production budget4) Direct material purchases budget5) Schedule of cash disbursements for material purchases6) Direct labor budgetb. Determine the balances in the following accounts as of March 31:1) Accounts Receivable2) Direct Materials3) Accounts Payable

 

Paper#45214 | Written in 18-Jul-2015

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