Accounting HELP!!!! Been stuck for HOURS


Question Description:

33

I do have some answers on these problems, but I’m not sure if they are correct and alot I do not have, I would appreciate some help as I am getting really exhausted in trying to figure this out. Thanks in advance! ————————————————- Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011. SIMID SPORTS COMPANY Estimated Balance Sheet December 31, 2011 Assets Cash 35,500 Accounts receivable 520,000 Inventory 150,000 Total Current Assets 705,500 Equipment 537,000 Less accumulated Deprecation 67,125 469,875 Total Assets 1,175,375 Liabilities and Equity Accounts Payable 355,000 Bank Loan Payable 16,000 Taxes Payable (due 3/15/2012) 90,000 Total Liabilities 461,000 Common Stock 475,000 Retained earnings 239,375 Total Stockholders’ equity 714,375 Total Liabilities and Equity 1,175,375 To prepare a master budget for January, February, and March of 2012, management gathers the following information. a. Simid Sports%u2019 single product is purchased for $30 per unit and resold for $53 per unit. The expected inventory level of 5,000 units on December 31, 2011, is more than management%u2019s desired level for 2012, which is 20% of the next month%u2019s expected sales (in units). Expected sales are: January, 7,500 units; February, 8,500 units; March, 11,000 units; and April, 9,000 units. b. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 61% is collected in the first month after the month of sale and 39% in the second month after the month of sale. For the December 31, 2011, accounts receivable balance, $125,000 is collected in January and the remaining $395,000 is collected in February. c. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2011, accounts payable balance, $75,000 is paid in January and the remaining $280,000 is paid in February. d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $90,000 per year. e. General and administrative salaries are $156,000 per year. Maintenance expense equals $2,000 per month and is paid in cash. f. Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $34,000; February, $96,000; and March, $30,000. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month%u2019s depreciation is taken for the month in which equipment is purchased. g. The company plans to acquire land at the end of March at a cost of $140,000, which will be paid with cash on the last day of the month. h. Simid Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $12,840 in each month. i. The income tax rate for the company is 39%. Income taxes on the first quarter%u2019s income will not be paid until April 15. Cash budget January, February, and March 2012 January February March Beginning cash balance cash receipts from customers Total cash available cash disbursements payments for merchandise sales commissions sales salaries general & administrative salaries Maintenance expense interest taxes payable purchase of equipment purchase of land Total cash disbursements Preliminary Cash balance Repayment of loan to bank Ending cash balance Loan balance, end of month ——————— Budgeted Income Statement For Three Months Ended March 31, 2012 Sales Cost of Goods sold Gross profit Operating expenses Sales commissions Sales Salaries General Administrative Salaries Maintenance Expense Depreciation Expense Interest expense Income before taxes Income taxes Net Income ———————— Budgeted balance sheet Assets Cash Accounts Receivable Inventory Total Current Assets Land Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equity Accounts Payable Bank Loan Payable Taxes Payable Total Liabilities Common Stock Retained Earnings Total Stockholder’s Equity Total Liabilities & Equity

Answer

33