Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believesthat it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of$500,000 starting May 1. The bank would charge interest at the rate of 1.00 percent per month andrequire the company to repay interest and principal on May 31. In considering the loan, the bankrequested a projected income statement and cash budget for May.The following information is available:The company budgeted sales at 600,000 units per month in April, June, and July and at 500,000units in May. The selling price is $4 per unit.The inventory of finished goods on April 1 was 120,000 units. The finished goods inventory at the endof each month equals 20 percent of sales anticipated for the following month. There is no work inprocess.The inventory of raw materials on April 1 was 58,000 pounds. At the end of each month, the rawmaterials inventory equals no less than 40 percent of production requirements for the followingmonth. The company purchases materials in quantities of 70,500 pounds per shipment.Selling expenses are 10 percent of gross sales. Administrative expenses, which include depreciationof $2,000 per month on office furniture and fixtures, total $155,000 per month.The manufacturing budget for tiles, based on normal production of 500,000 units per month, follows:Materials ( 0.25 pound per tile, 125,000 pounds, $4 per pound)LaborVariable overhead$500,000410,000200,000390,000Fixed overhead (includes depreciation of $220,000)Total$1,500,000Required:a-1. Prepare schedules computing inventory budgets by months for production in units for April, May, andJune.a-2. Prepare schedules computing inventory budgets by months for raw materials purchases in poundsfor April and May.b. Prepare a projected income statement for May. Cost of goods sold should equal the variablemanufacturing cost per unit times the number of units sold plus the total fixed manufacturing costbudgeted for the period. When calculating net sales assume cash discounts of 1 percent and bad debtexpense of O.50 percent. Prepare a projected income statement for May. Cost of goods sold should equal the variable manufacturing costthe number of units sold plus the total fixed manufacturing cost budgeted for the period. When calculating netcash discounts of 1 percent and bad debt expense of 0.50 percent. (Do not round intermediate calculations.)BRIGHTON, INC.Projected Income StatementFor the Month of MayNet Sales$Cost of Sales:$Expenses:$< Req A2Req B >

IS termed as Income statement which refers to the one of the FS (Financial statement of business)…

ighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller belle hat it will need to borrow cash to continue operations. It began negotiating for a one-month bank 500,000 starting May 1. The bank would charge interest at the rate of 1.00 percent per month and equire the company to repay interest and principal on May 31. In considering the loan, the bank equested a projected income statement and cash budget for May. he following information is available: The company budgeted sales at 600,000 units per month in April, June, and July and at 500,0 units in May. The selling price is $4 per unit. The inventory of finished goods on April 1 was 120,000 units. The finished goods inventory at of each month equals 20 percent of sales anticipated for the following month. There is no wor process. The inventory of raw materials on April 1 was 58,000 pounds. At the end of each month, the ra materials inventory oguals no loss than 40 percent of production reguirements for the followwin

ighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller belle hat it will need to borrow cash to continue operations. It began negotiating for a one-month bank 500,000 starting May 1. The bank would charge interest at the rate of 1.00 percent per month and equire the company to repay interest and principal on May 31. In considering the loan, the bank equested a projected income statement and cash budget for May. he following information is available: The company budgeted sales at 600,000 units per month in April, June, and July and at 500,0 units in May. The selling price is $4 per unit. The inventory of finished goods on April 1 was 120,000 units. The finished goods inventory at of each month equals 20 percent of sales anticipated for the following month. There is no wor process. The inventory of raw materials on April 1 was 58,000 pounds. At the end of each month, the ra materials inventory oguals no loss than 40 percent of production reguirements for the followwin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $500,000 starting May 1. The bank would charge interest at the rate of 1.25 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information is available: W . The company budgeted sales at 600,000 units per month in April, June, and July and at 450,000 units in May. The selling price is $4 per unit. . The inventory of finished goods on April 1 was 150,000 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. . The inventory of raw materials on April 1 was 42,188 pounds. At the end of each month, the raw materials inventory equals no less…
Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month bank loan of $600,000 starting May 1. The bank would charge interest at the rate of 1.25 percent per month and require the company to repay interest and principal on May 31. In considering the loan, the bank requested a projected income statement and cash budget for May. The following information is available: The company budgeted sales at 650,000 units per month in April, June, and July and at 500,000 units in May. The selling price is $4 per unit. The inventory of finished goods on April 1 was 162,500 units. The finished goods inventory at the end of each month equals 25 percent of sales anticipated for the following month. There is no work in process. The inventory of raw materials on April 1 was 61,250 pounds. At the end of each month, the raw materials inventory equals no less than…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $60,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: The company budgeted sales at 22,000 units per month in February, April, and May and at 19,000 units in March. The selling price is $70 per unit. The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. The inventory of finished goods on February 1 was 3,400 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $60,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: • The company budgeted sales at 22,000 units per month in February, April, and May and at 19,000 units in March. The selling price is $70 per unit. • The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. • The inventory of finished goods on February 1 was 3,400 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
Lane Products manufactures a popular kitchen utensil. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It opened negotiations with the local bank for a one-month loan of $44,000 starting March 1. The bank would charge interest at the rate of 0.5 percent per month and require the company to repay interest and principal on March 31. In considering the loan, the bank requested a projected income statement and cash budget for March. The following information is available: ● ● ● ● The company budgeted sales at 14,000 units per month in February, April, and May and at 11,000 units in March. The selling price is $62 per unit. The company offers a 2 percent discount for cash sales. The company's experience is that bad debts average 1 percent of credit sales. The inventory of finished goods on February 1 was 2,600 units. The desired finished goods inventory at the end of each month equals 25 percent of sales anticipated for the…
The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: On April 1, the start of the loan period, the cash balance will be $24,000. Accounts receivable on April 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible. Past experience shows that30% of a month’s sales are collected in the month of sale, 60% in the month followingsale, and 8% in the second month following sale. The other 2% represents bad debts that are never collected. Budgeted sales and expenses for the…
The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: On April 1, the start of the loan period, the cash balance will be $24,000. Accounts receivable on April 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the three-month…
The president of the retailer Prime Products has just approached the company's bank with a request for a $77,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $36,600. Accounts receivable on April 1 will total $187,600, of which $160,800 will be collected during April and $21,440 will be collected during May. The remainder will be uncollectible. b. Past experience shows that 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the…
The president of the retailer Prime Products has just approached the company's bank with a request for a $49,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: On April 1, the start of the loan period, the cash balance will be $38,500. Accounts receivable on April 1 will total $148,400, of which $127,200 will be collected during April and $16,960 will be collected during May. The remainder will be uncollectible. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the…
The president of the retailer Prime Products has just approached the company's bank with a request for a $57,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: a. On April 1, the start of the loan period, the cash balance will be $30,800. Accounts receivable on April 1 will total $159,600, of which $136,800 will be collected during April and $18,240 will be collected during May. The remainder will be uncollectible. ɔ. Past experience shows that 30% of a month's sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the…
The president of the retailer Prime Products has just approached the company's bank with a request for a $57,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: On April 1, the start of the loan period, the cash balance will be $30,800. Accounts receivable on April 1 will total $159,600, of which $136,800 will be collected during April and $18,240 will be collected during May. The remainder will be uncollectible. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the…
The president of the retailer Prime Products has just approached the company's bank with a request for a $91,000, 90-day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used: On April 1, the start of the loan period, the cash balance will be $15,800. Accounts receivable on April 1 will total $176,400, of which $151,200 will be collected during April and $20,160 will be collected during May. The remainder will be uncollectible. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% is bad debts that are never collected. Budgeted sales and expenses for the…