Question

Q NA G 13-62. Comprehensive Budget Plan ( LO 13-4, 5, Q. excel Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow. Page 575 PANTHER CORPORATION Expected Account Balances for December 31, Year 2 Cash $ 4,800 Accounts receivable 320,000 Inventory (January 1 year 2) 192,000 Plant and equipment 520,000 Accumulated depreciation $ 164,000 Accounts payable 180,000 Notes payable (due within one year) 200,000 Accrued payables 93,000 Common stock 280,000 Retained earnings 432,800

Answer 1

Panther Corporation Budgeted Income Statement For the Year Ended December 31, Year 2 Particulars $ Amount ($) Revenue : Sales Revenue 2,400,000 Other Income 36,000 Total Revenue 2,436,000 Expenses : Cost of goods manufactured and sold - Materials Direct Labor Variable Overheads Fixed Overheads 852,000 872,000 520,000 51,000 2,295,000 Add: Beginning Inventory 192,000 2,487,000 (459,000) 2,028,000 Less: Closing Inventory (W.N-1) Marketing: Salaries Commissions Promotions and Advertising 64,000 80,000 180,000 324,000 Administrative : Salaries Travel Other Costs 64,000 10,000 36,000 110,000 Income Taxes (W.N-2) Total Expenses Operating Profit/ (Loss) (10,400) 2,451,600 (15,600)

W.N-1: Determination of the Closing Stock (In Units): Beginning Inventory 40,000 Units Added to Inventory (450,000 - 400,000) 50,000 Units Ending Inventory 90,000 Units Determination of Cost of Ending Inventory: Manufacturing Costs 2,295,000 # of Units Manufactured 450,000 Cost per Unit of goods manufactured 5.10 Closing Stock (In Units) 90,000 Cost of Closing Stock 459,000 W.N-2: Determination of the Income Tax Payable : Income: Sales 2,400,000 Other Income 36,000 2,436,000 Expenses : Cost of goods sold 2,028,000 Selling Expenses 324,000 General & Administrative Expenses 110,000 Total Cost 2,462,000 Loss Tax Credit @ 40% (26,000) (10,400)

Amount ($) Panther Corporation Budgeted Balance Sheet As on December 31, Year 2 Particulars $ Current Assets : Cash 4,800 Accounts Receivables 320,000 Inventory 459,000 Income Tax Receivables 10,400 Total Current Assets 794,200 Property, plant and Equipment: Plant and Equipment Less : Accumulated Depreciation 520,000 (164,000) 356,000 Total Assets 1,150,200 Current Liabilities: Accounts Payables Accrued Payables Notes Payables Total Current Liabilities 180,000 93,000 200,000 473,000 Stockholders' Equity Common Stock Retained Earnings (432,800 - 15,600 - 20,000)| Total Stockholders' Equity 280,000 397,200 677,200 Total Liabilities and Stockholders' Equity 1,150,200