Question

The Bank of the West has asked the president of Montoya Products, Inc., for a budgeted Income statement and budgeted balance sheet for the quarter ending June 30, 20x1. These documents will be used to support the company's request for a loan. A quarterly master budget is routinely prepared by the company, so the president indicated that the requested documents would be forwarded to the bank To date (April 2), the following operating budgets have been developed. Sales: April, $220,400, May, $164,220, and June, $165,980; direct materials purchases for the period, $96,840; direct materials usage, $102,710; direct labor expenses, $71,460; manufacturing overhead, $79,940; selling and administrative expenses, $143,740; capital expenditures, $125,000 (to be spent on June 29); cost of goods manufactured, $252,880; and cost of goods sold, $251,700 Balance sheet account balances at March 31, 20xl were: Cash, $28,770; Accounts Receivable, $26,500; Direct Materials Inventory. $23,910; Work in Process Inventory $31,620; Finished Goods Inventory, $36,220; Prepaid Expenses, $7,200; Plant, Furniture, and Fixtures, $498,600; Accumulated Depreciation, Plant, Furniture, and Fixtures, $141,162; Patents, $90,600; Accounts Payable, $39,600; Notes Payable, $105,500; Common Stock, $250,000; and Retained Earnings, $207,158. Monthly cash balances for the quarter are projected to be: April 30, $20,490; May 31, $35,610; and June 30, $45,400. During the quarter, accounts receivable are supposed to Increase by 30 percent, patents will go up by $6,500, prepald expenses will remain con- stant, accounts payable will go down by 10 percent, and the company will make a $5,000 payment on the note payable ($4,100 is principal reduction). The federal Income tax rate is 34 percent and the second quarter's tax is paid in July. Depreciation for the quarter will be $6,420, which was already included in the manufacturing overhead budget. No divi- dends were paid. 1. Prepare a budgeted income statement for the quarter ending June 30, 20xl. Round answers to the nearest dollar. 2. Prepare a budgeted balance sheet as of June 30, 20xl.

Answer 1

Answer with working is given below

$550,600 MONTOYA PRODUCT INC Budgeted Income Statement For the Quarter Ended June 30th, 20X1 Sales Revenue Less: Cost of Goods sold Gross Profit Less: Selling and administration expenses Profit before Interest Interest on Notes payable Profit before Tax Income tax at 34% Profit After Tax $251,700 $298,900 $143,740 $155,160 $900 $154,260 $52,448 $101,812 MONTOYA PRODUCT INC Budgeted Balance Sheet As On June 30th, 20x1 Assets Current Assets Cash Accounts receivable Direct Material Inventory WIP Inventory Finished Goods Prepaid Expenses Total Current Assets Fixed Assets Plant and Equipment Additions $45,400 $34,450 $18,040 $32,850 $37,400 $7,200 $175,340 $498,600 $125,000 $623,600 $147,582 Less: Depreciation $476,018 Intangible Assets Patents Additions during the Quarter $90,600 $6,500 $97,100 $748,458 Total Assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Income Tax payable Total Current Liabilities $35,640 $52,448 $88,088 Long Term Liabilities Notes Payable $101,400 Stockholders' equity Common stock Retained earnings $250,000 $308,970 $558,970 Total Liabilities and Stockholders' Equity $748,458 Working notes Retained Earnings Opening balance Add: Net Profit during the year Closing balance of Retained Earnings $207,158 $52,448 $259,606 Direct Material- Closing stock Opening stock Purchases of Material Total Direct Material available Direct Material consumed Closing stock of Direct Material $23,910 $96,840 $120,750 $102,710 $18,040 Closing stock of WIP Opening stock of WIP Direct Material consumed Direct Labor Manufacturing Overhead $31,620 $102,710 $71,460 $79,940 $285,730 $252,880 $32,850 Cost of Goods Manufactured Closing stock of WIP Closing stock of Finished Goods Opening stock of Finished Goods Cost of goods Manufactured Total Finished Goods available Cost of Goods sold Closing stock of Finished Goods $36,220 $252,880 $289,100 $251,700 $37,400