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Req. 4Req. 1Journal EntryReq. 4Journal EntryJournal EntryJournal EntryJournal EntryRequired Text Horngren, C., Harrison, Jr., W., & Oliver, M.S. (2012). Accounting (9th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. ISBN: 9780132569057Week 5Required Readings 1. Chapter 22: The Master Budget and Responsibility Accounting 2. Chapter 23: Flexible Budgets and Standard CostsAssignments Chapter 22, E 22-19 Chapter 22, P 22-22A Chapter 23, P 23-28AE22-19 Preparing a financial budget [25–30 min]Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com:a. June 30 inventory balance, $17,750b. July payments for inventory, $4,300c. July payments of accounts payable and accrued liabilities, $8,200d. June 30 accounts payable balance, $10,600e. June 30 furniture and fixtures balance, $34,500; accumulated depreciation balance, $29,830f. June 30 equity, $28,360g. July depreciation expense, $900h. Cost of goods sold, 50% of salesi.Other July expenses, including income tax, total $6,000, paid in cashj.June 30 cash balance, $11,400k. July budgeted credit sales, $12,700l.June 30 accounts receivable balance, $5,140m. July cash receipts, $14,200Requirement1. Prepare a budgeted balance sheet.(25-30 min.) E 22-19Req. 1Cash +Accountsreceivable+Inventory+ Furniture+(Accum.deprec.) =Accountspayable+Stockholders’equityJune 30 balancej)$11,400 l)$5,140 a) $17,750 e)$34,500 e)$(29,830) = d)$10,600 f)$28,360Payments for inventoryb)(4,300) 4,300 =Payments on account(8,200) = c)(8,200) Depreciation g)(900) = (900)Cost of goods soldh)(6,350)* = (6,350)Other expensesi)(6,000) = (6,000)Sales on creditk)12,700 = 12,700Cash receipts(m)14,200 m)(14,200) ______ ______ ______ = ______ _______July 31 balance$7,100 $3,640 $15,700 $34,500 $(30,730) = $2,400 + $27,810*$12,700 x .50 = $6,350(15-20 min.) E 22-19Req. 1Oleans.comBudgeted Balance SheetJuly 31, 2012AssetsCurrent assets: Cash $7,100 Accounts receivable 3,640 Inventory 15,700 Total current assets $26,440Plant assets: Furniture and fixtures $34,500 Accumulated depreciation (30,730) 3,770 Total assets $30,210LiabilitiesCurrent liabilities: Accounts payable $2,400Total liabilities 2,400Stockholders’ EquityStockholders’ equity $27,810Total liabilities and stockholders’ equity $30,210P22-22A Preparing an operating budget [30 min]Thumbtack's March 31, 2012, budgeted balance sheet follows:The budget committee of Thumbtack Office Supply has assembled the following data.a. Sales in April were $40,000. You forecast that monthly sales will increase 2% over April's sales in May. June's sales will increase 4% over April's sales. July's sales will increase 20% over April's sales. Collections are 80% in the month of sale and 20% in the month following sale.b. Thumbtack maintains inventory of $11,000 plus 25% of theCOGS budgeted for the following month. COGS = 50% of sales revenue. Purchases are paid 30% in the month of purchase and 70% in the month following the purchase.c. Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month. Salaries and commissions are paid 30% in the month incurred and 70% in the following month.d. Other monthly expenses are as follows:Requirements1. Prepare Thumbtack's sales budget for April and May, 2012.Round all amounts to the nearest $1.2. Prepare Thumbtack's inventory, purchases, and cost of goods sold budget for April and May.3. Prepare Thumbtack's operating expenses budget for April and May.4. Prepare Thumbtack's budgeted income statement for April and May.Note: We recommend you solve this and the related problems (P22-23A and P22-24A) using Excel templates that you create.(30 min.) P 22-22AReq. 1Thumbtack Office SupplySales BudgetApril – May 2012April MaySales $40,000 $40,800 aa $40,000 x 1.02 = $40,800Req. 2Thumbtack Office SupplyInventory, Purchases, and Cost of Goods Sold BudgetApril – May 2012April MayCost of goods sold a$20,000 $20,400Desired ending inventory 16,100 b 16,200 cDesired inventory $36,100 $36,600Beginning inventory (16,000) d(16,100)ePurchases $20,100 $20,500a 50% of sales revenueb $11,000 + (0.25 x $20,400) = $16,100c $11,000 + [($40,000 x 1.04) x .50 x 0.25] = $16,200d Inventory amount from the Budgeted Balance Sheete same as b(continued) P 22-22AReq. 3Thumbtack Office SupplyOperating Expenses Budget April – May 2012April MayVariable operating expenses: Commissions expense a$2,000 $2,040Fixed operating expenses: Salaries expense $7,000 $7,000 Rent expense 2,400 2,400 Depreciation expense 200 200 Insurance expense 100 100 Total fixed operating expenses $9,700 $9,700 Total operating expenses $11,700 $11,740a 5% of sales for that month(continued) P 22-22AReq. 4Thumbtack Office SupplyBudgeted Income StatementsMonths Ending April – May 2012April MaySales revenue $40,000 $40,800Cost of goods sold 20,000 20,400 Gross profit $20,000 $20,400Variable operating expenses: Commission expense 2,000 2,040 Contribution margin $18,000 $18,360Fixed operating expenses: Salaries expense $7,000 $7,000 Rent expense 2,400 2,400 Depreciation expense 200 200 Insurance expense 100 100Total fixed operating expenses $9,700 $9,700Operating income $8,300 $8,660 Income tax expense 1,660 a 1,732 bNet income $6,640 $6,928a $8,300 x 0.20 = $1,660b $8,660 x 0.20 = $1,732P23-28A Computing and journalizing standard cost variances [45 min]Java manufactures coffee mugs that it sells to other companies for customizing with their own logos. Java prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month:Actual cost and production information for July 2012 follow:a. Actual production and sales were 62,900 coffee mugs.b. Actual direct materials usage was 10,000 lbs., at an actual price of $0.17 per lb.c. Actual direct labor usage was 202,000 minutes at a total cost of $30,300.d. Actual overhead cost was $10,000 variable and $30,500 fixed.e. Marketing and administrative costs were $115,000.Requirements1. Compute the price and efficiency variances for direct materials and direct labor.2. Journalize the usage of direct materials and the assignmentof direct labor, including the related variances.3. For


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UOPX ACC 206 - Week 5

Course: Acc 206-
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