Balance Sheet and Following Account Balances
ACT202 Coursework: Budgeting
Deadline: Final Week of the semester
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis.
The following data have been assembled to assist in preparing the master budget for the first quarter:
a. As of December 31, 2011 (the end of the prior quarter), the company’s general ledger showed the following account balances:
DEBIT
CREDIT
$
$
Cash
48,000
Accounts receivable
224,000
Finished goods Inventory (1000 units)
60,000
Raw Materials inventory (500 units)
10,000
Buildings and equipment (net)
370,000
Accounts payable
93,000
Capital stock
510,000
Retained earnings
109,000
712,000 712,000
b.
‐ Actual sales for December and budgeted sales for the next four months are as follows:
‐ December (actual)
2800 units
‐ It is expected that sales will increase by 40% in the month of January and by a further 50% in the next month. The following month sales would drop by 50% and then will will rema remain in cons constant tant for for the next next 2 mon months ths
‐ The management will not alter the selling price, which is currently $100
‐ Management wants finished goods inventory to be 20% of the following month's sales
‐ One units of finished goods require 2 kilos of raw materials.
‐ The price of materials is currently $10 per kilo and is expected to increase by 50% in February whereafter it will remain constant for the next four months.
‐ The management wants raw materials inventory to be 10% of the following month's production needs
‐ Each unit of product requires 2 hours of direct materials for completion.
‐ The labourers are expected to work for a total of 4000 hours per month at a wage rate of
$6 per hour. Any additional work requires an overtime payment of time and a half.
‐ Manufacturing overhead: variable: $5 per labour hours worked; fixed $17000 per month.
‐ Sales are 20% for cash and 80% on credit. Half of the credit sales are
Deadline: Final Week of the semester
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis.
The following data have been assembled to assist in preparing the master budget for the first quarter:
a. As of December 31, 2011 (the end of the prior quarter), the company’s general ledger showed the following account balances:
DEBIT
CREDIT
$
$
Cash
48,000
Accounts receivable
224,000
Finished goods Inventory (1000 units)
60,000
Raw Materials inventory (500 units)
10,000
Buildings and equipment (net)
370,000
Accounts payable
93,000
Capital stock
510,000
Retained earnings
109,000
712,000 712,000
b.
‐ Actual sales for December and budgeted sales for the next four months are as follows:
‐ December (actual)
2800 units
‐ It is expected that sales will increase by 40% in the month of January and by a further 50% in the next month. The following month sales would drop by 50% and then will will rema remain in cons constant tant for for the next next 2 mon months ths
‐ The management will not alter the selling price, which is currently $100
‐ Management wants finished goods inventory to be 20% of the following month's sales
‐ One units of finished goods require 2 kilos of raw materials.
‐ The price of materials is currently $10 per kilo and is expected to increase by 50% in February whereafter it will remain constant for the next four months.
‐ The management wants raw materials inventory to be 10% of the following month's production needs
‐ Each unit of product requires 2 hours of direct materials for completion.
‐ The labourers are expected to work for a total of 4000 hours per month at a wage rate of
$6 per hour. Any additional work requires an overtime payment of time and a half.
‐ Manufacturing overhead: variable: $5 per labour hours worked; fixed $17000 per month.
‐ Sales are 20% for cash and 80% on credit. Half of the credit sales are