Somehow you seem to be missing some of my posts. Your income statement is not right - way off actually. The problem is that you are only showing one month's worth of the fixed expenses, not 3 month's worth. You do have Utilities right - $7000 per month, $21,000 for 3 months. For example, though, you only have one month of Advertising. It is $200,000 per month. Why don't you fix that and the Balance Sheet, and then we can talk about the Balance Sheet? I said this above, but almost all of the BS numbers will change. You have $104,000 for inventory, but that was the amount on 3/31 based on the 40% inventory for April's needs. Prepaid Insurance was $21,000 at the end of March, but don't forget that 3 months were written off.

Those are just 2 examples. Most of the numbers need to change.

I have made the adjustments to the income statement and some to the BS. I don't know if what I did was correct, especially in terms of the equipment. It was stated there was 95000 as of March, so I added the equipment additions of 56000. Please advise. Thank you

EARRINGS UNLIMITED
BUDGETED INCOME STATEMENT
FOR THE THREE MONTHS ENDED JUNE 30

Sales 2,150,000
Variable expenses:
Cost of goods sold 860,000
Commissions 86,000 946,000
Contribution Margin 1,204,000
Fixed expenses:
Advertising 600,000
Rent 54,000
Salaries 318,000
Utilities 21,000
Insurance 9,000
Depreciation 42,000 1,044,000
Net operating income 160,000
Interest expense (5,300)
Net income 154,700


EARRINGS UNLIMITED
BUDGETED BALANCE SHEET
JUNE 30

Assets:

Cash 94,700
Accounts receivable (see below) 1,000,000
Inventory 20,000
Prepaid insurance (21,000)
Property and equipment, net 151,000
Total assets 1,244,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 719,700
Total liabilities and stockholders' equity 1,634,700


Accounts receivable at June 30:
May sales x ?% 900,000
June sales x ?% 100,000
Total 1,000,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 154,700
Total 734,700
Less dividends declared 15,000
Balance, June 30 719,700

I went back through again and still coming up with the same answers. I have been looking at the Liabilities and SE and my answer is close but off by 16. I think I am close to wrapping this up but unsure at this point. Thanks

Income Statement is right.

On the Balance Sheet, show me how you came up with $100,000 for A/P. The assets are not right. Assets=Liabilities + Owners Equity
Your Assets should also equal $1,618,700. The only correct number is the Cash.

Let me start with A/R since you showed how you computed that number. Per the problem, they collect 20% in month of sale, 70% in following month and 10% in the next month. So for June, we look at April, May, and June. April was received 20% in April, 70% in May, and 10% in June. Therefore nothing is due for April. May was received 20% in May, 70% in June, and 10% in July. Therefore at the end of June, 10% is due. Let's leave June for you to compute to make sure you understand. Can you now redo the A/R?

If you'll show me how you got Inventory, Ppd Ins, and P&E, we can see where you are going wrong.

To begin the way I came up with the AP was from the information provided for the end of March. I made some more adjustments but still not coming up with the correct answer. For the AR I took sales for June 500000 and multiplied it by 20% to get 100000 collected, leaving 400000in AR at end of month. Then I took May, 1000000 and multiplied it by 20%, 70%, & 10%. I came up with 200000 collected in May, 700000 in June, which leavs 100000 (or 10%) remaining in AR.

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 20,000
Prepaid insurance (21,000)
Property and equipment, net 151,000
Total assets 744,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 725,000
Total liabilities and stockholders' equity 1,640,000


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 160,000
Total 740,000
Less dividends declared 15,000
Balance, June 30 725,000

I have found another mistake with the property and equipment I had it as 95000 existing when it was actually 950000. I have about an hour and a half left before I have to submit this. Any further suggestions. I can't seem to get where I need to be. Thx

You are closer than you think. Cash and A/R are right. Inventory - Remember inventory is at 40% of the following month's projected sales units at the $4 cost per unit. The $104,000 was 65,000 units * $4 * .4

Ppd Insurance was $21,000 at 3/31. How much was expensed for the three months? You did this for your Income Statement.

For Property and Equipment, it looks like you took the $95,000 plus the $56,000 in purchases. You know now that the starting balance was $950,000 + $56,000 in purchases - change in accumulated depreciation (cuz it's asking for net P&E).

A/P - I did it differently. I started with the $100,000 added the purchases and subtracted the payments.

I'm going to post this for you to start working on it, and then go back and look at how you did it.

Ok for PPE - 950000+16000 (purchase in May+40000 in June = 1006000
Prepaid Insurance - I got this figure from the data given on the company ledger listed as prepaid insurance
Inventory - I took this as 20000, but the more I look at it I think it should be 12000

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 20,000
Prepaid insurance (21,000)
Property and equipment, net 1,006,000
Total assets 1,599,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 725,000
Total liabilities and stockholders' equity 1,640,000


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 160,000
Total 740,000
Less dividends declared 15,000
Balance, June 30 725,000

Quote:

---

Originally Posted by Will2412

MERCHANDISE PURCHASES BUDGET:
April May June Quarter
Budgeted unit sales 65,000 100,000 50,000 215,000
Add desired ending inventory 40,000 20,000 12,000 12,000
Total needs 105,000 120,000 62,000 227,000
Less beginning inventory 16,000 40,000 20,000 16,000
Required purchases 89,000 80,000 42,000 211,000
Cost of purchases @ $4 per unit $ 356,000.00 $ 320,000.00 $ 168,000.00 $ 844,000.00



BUDGETED CASH DISBURSEMENTS FOR MERCHANDISE PURCHASES:
April May June Quarter
Accounts payable $100,000.00 $100,000.00
April purchases $158,000.00 $158,000.00 $316,000.00
May purchases $160,000.00 $160,000.00 $320,000.00
June purchases $84,000.00 $84,000.00
Total cash payments $258,000.00 $318,000.00 $244,000.00 $416,000.00

---

Okay, you actually have your A/P in here. Remember when you had to show that 50% was paid in the current month and 50% was paid in the following month. For June, we computed that purchases were $168,000. So $84,000 were paid in June and $84,000 are to be paid in July - thus that is an Account Payable.

Quote:

---

Originally Posted by Will2412

Ok for PPE - 950000+16000 (purchase in May+40000 in June = 1006000
Prepaid Insurance - I got this figure from the data given on the company ledger listed as prepaid insurance
Inventory - I took this as 20000, but the more i look at it I think it should be 12000

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 20,000
Prepaid insurance (21,000)
Property and equipment, net 1,006,000
Total assets 1,599,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 725,000
Total liabilities and stockholders' equity 1,640,000


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 160,000
Total 740,000
Less dividends declared 15,000
Balance, June 30 725,000

---

With the net fixed assets, you have to adjust by the depreciation. Also, why did you change RE? You had it right.

Quote:

---

Originally Posted by Just Looking

You are closer than you think. Cash and A/R are right. Inventory - Remember inventory is at 40% of the following month's projected sales units at the $4 cost per unit. The $104,000 was 65,000 units * $4 * .4

Ppd Insurance was $21,000 at 3/31. How much was expensed for the three months? You did this for your Income Statement.

For Property and Equipment, it looks like you took the $95,000 plus the $56,000 in purchases. You know now that the starting balance was $950,000 + $56,000 in purchases - change in accumulated depreciation (cuz it's asking for net P&E).

A/P - I did it differently. I started with the $100,000 added the purchases and subtracted the payments.

I'm going to post this for you to start working on it, and then go back and look at how you did it.

---

I think our posts were crossing in time, so I wanted to make sure you saw this.

Im close but no cigar yet. I still am not seeing it. I redid the assets and ended up within $3. I understand what you were saying about the 100000 and adding purchases then subtracting purchases but I am still confused on what data is to be used. The neumbers I am punching in just aren't working. I know Im doing something simple wrong but can't figure it out. Sorry but its crunch time and it all is beginning to look the same. Here is the updated data. Can't figure out where Im off at.

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 48,000
Prepaid insurance 9,000
Property and equipment, net 964,000
Total assets 1,615,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 719,700
Total liabilities and stockholders' equity 1,634,700


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 154,700
Total 734,700
Less dividends declared 15,000
Balance, June 30 719,700

Prepaid Insurance started at $21,000. You wrote off $9,000. You have $12,000 remaining.

You must have missed my post about A/P.

Originally Posted by Will2412
MERCHANDISE PURCHASES BUDGET:
April May June Quarter
Budgeted unit sales 65,000 100,000 50,000 215,000
Add desired ending inventory 40,000 20,000 12,000 12,000
Total needs 105,000 120,000 62,000 227,000
Less beginning inventory 16,000 40,000 20,000 16,000
Required purchases 89,000 80,000 42,000 211,000
Cost of purchases @ $4 per unit $ 356,000.00 $ 320,000.00 $ 168,000.00 $ 844,000.00



BUDGETED CASH DISBURSEMENTS FOR MERCHANDISE PURCHASES:
April May June Quarter
Accounts payable $100,000.00 $100,000.00
April purchases $158,000.00 $158,000.00 $316,000.00
May purchases $160,000.00 $160,000.00 $320,000.00
June purchases $84,000.00 $84,000.00
Total cash payments $258,000.00 $318,000.00 $244,000.00 $416,000.00



Okay, you actually have your A/P in here. Remember when you had to show that 50% was paid in the current month and 50% was paid in the following month. For June, we computed that purchases were $168,000. So $84,000 were paid in June and $84,000 are to be paid in July - thus that is an Account Payable.

I fixed RE. I made some adjustment but just not seeing it. What am I doing wrong. Only 30 minutes left to finish it. I feel like I am starting over. Anyway let me know what you think. Thanks

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 48,000
Prepaid insurance 9,000
Property and equipment, net 964,000
Total assets 1,615,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 100,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 725,000
Total liabilities and stockholders' equity 1,640,000


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 160,000
Total 740,000
Less dividends declared 15,000
Balance, June 30 725,000

Are you not seeing my posts?

Prepaid Insurance started at $21,000. You wrote off $9,000. You have $12,000 remaining.

Okay, you actually have your A/P in here. Remember when you had to show that 50% was paid in the current month and 50% was paid in the following month. For June, we computed that purchases were $168,000. So $84,000 were paid in June and $84,000 are to be paid in July - thus that is an Account Payable.

Your RE was right at $719,700. Your net income was right at $154,700.

I fixed the assets and matched the check data there. Now it is just Liability and S&E

Okay, you actually have your A/P in here. Remember when you had to show that 50% was paid in the current month and 50% was paid in the following month. For June, we computed that purchases were $168,000. So $84,000 were paid in June and $84,000 are to be paid in July - thus that is an Account Payable.

Your RE was right at $719,700. Your net income was right at $154,700.

I think I got it all. YEAHHHH!! Well thanks too you that is. Take a look at this and tell me if this is it

SALES BUDGET:
April May June Quarter
Budgeted unit sales 65,000 100,000 50,000 215,000
Selling price per unit 10 10 10 10
Total Sales 650,000 1,000,000 500,000 2,150,000


SCHEDULE OF EXPECTED CASH COLLECTIONS:
April May June Quarter
February sales 26,000 26,000
March sales 280,000 40,000 320,000
April sales 130,000 455,000 65,000 650,000
May sales 200,000 700,000 900,000
June sales 100,000 100,000
Total Cash Collections 436,000 695,000 865,000 1,996,000


MERCHANDISE PURCHASES BUDGET:
April May June Quarter
Budgeted unit sales 65,000 100,000 50,000 215,000
Add desired ending inventory 40,000 20,000 12,000 12,000
Total needs 105,000 120,000 62,000 227,000
Less beginning inventory 26,000 40,000 20,000 26,000
Required purchases 79,000 80,000 42,000 201,000
Cost of purchases @ $4 per unit $316,000.00 $320,000.00 $168,000.00 $804,000.00


BUDGETED CASH DISBURSEMENTS FOR MERCHANDISE PURCHASES:
April May June Quarter
Accounts payable $100,000.00 $100,000.00
April purchases $158,000.00 $158,000.00 $316,000.00
May purchases $160,000.00 $160,000.00 $320,000.00
June purchases $84,000.00 $84,000.00
Total cash payments $258,000.00 $318,000.00 $244,000.00 $416,000.00


EARRINGS UNLIMITED
CASH BUDGET
FOR THE THREE MONTHS ENDING JUNE 30
April May June Quarter
Cash balance $74,000.00 $50,000.00 $50,000.00 $174,000.00
Add collections from customers $436,000.00 $695,000.00 $865,000.00 $595,600.00
Total cash available $510,000.00 $745,000.00 $915,000.00 $2,170,000.00

Less Disbursements
Merchandise purchases $258,000.00 $318,000.00 $244,000.00 $416,000.00
Advertising $200,000.00 $200,000.00 $200,000.00 $200,000.00
Rent $18,000.00 $18,000.00 $18,000.00 $18,000.00
Salaries $106,000.00 $106,000.00 $106,000.00 $106,000.00
Commissions $26,000.00 $40,000.00 $20,000.00 $86,000.00
Utilities $7,000.00 $7,000.00 $7,000.00 $21,000.00
Equipment purchases $16,000.00 $40,000.00 $56,000.00
Dividends paid $15,000.00 $15,000.00
Total Disbursements $630,000.00 $705,000.00 $635,000.00 $918,000.00

Excess (deficiency) of receipts over disbursements
(120,000) 40,000 280,000 1,252,000
Financing:
Borrowings 170,000 10,000 180,000
Repayments 180,000 (180,000)
Interest 5,300 (5,300)
Total financing 170,000 10,000 185,300 (5,300)

Cash balance, ending 50,000 50,000 94,700 94,700


EARRINGS UNLIMITED
BUDGETED INCOME STATEMENT
FOR THE THREE MONTHS ENDED JUNE 30

Sales 2,150,000
Variable expenses:
Cost of goods sold 860,000
Commissions 86,000 946,000
Contribution Margin 1,204,000
Fixed expenses:
Advertising 600,000
Rent 54,000
Salaries 318,000
Utilities 21,000
Insurance 9,000
Depreciation 42,000 1,044,000
Net operating income 160,000
Interest expense (5,300)
Net income 154,700


EARRINGS UNLIMITED
BUDGETED BALANCE SHEET
JUNE 30

Assets:

Cash 94,700
Accounts receivable (see below) 500,000
Inventory 48,000
Prepaid insurance 12,000
Property and equipment, net 964,000
Total assets 1,618,700


Liabilities and Stockholders' Equity

Accounts payable, purchases 84,000
Dividends payable 15,000
Capital stock 800,000
Retained earnings (see below) 719,700 -
Total liabilities and stockholders' equity 1,618,700


Accounts receivable at June 30:
May sales x ?% 100,000
June sales x ?% 400,000
Total 500,000


Retained earnings at June 30:
Balance, March 31 580,000
Add net income 154,700
Total 734,700
Less dividends declared 15,000
Balance, June 30 719,700

Look at the $416k under budgeted cash disbursements - not added right. The detail for the months is right.

I had to check it really fast, but all else looks good.

If you happen to see this, I'd encourage you to read over this whole thread again and look over your workpapers when you aren't so rushed. The end was a little crazy and it seemed like we were crossing posts or something as I had to keep repeating myself. I think you will understand it better if you look over it in your leisure.