All sales are made on account at 20 per unit sixty percent

Assignment Help Accounting Basics

Reference no: EM13480043

The balance sheet of Watson Company as of December 31, 19X1, follows. WATSON COMPANY Balance Sheet December 31, 19X1 Assets Cash $4,595 Accounts receivable 10,000 Finished goods (575 units x $7.00) 4,025 Direct materials (2,760 units x $0.50) 1,380 Plant & equipment $50,000 Less: Accumulated depreciation 10,000 40,000 Total assets $60,000 Liabilities & Stockholders' Equity Accounts payable to suppliers $14,000 Common stock $25,000 Retained earnings 21,000 46,000 Total liabilities &. stockholders' equity $60,000 The following information has been extracted from the firm's accounting records:

1. All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first five months of 19X2 are: January, 1,500 units,- February, 1,600 units; March, 1,800 units; April, 2,000 units; May, 2,100 units.

2. Management wants to maintain the finished goods inventory at 30% of the following month's sales.

3. Watson uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next six months. Management wants to maintain the ending direct materials inventory at 60% of the following month's production needs.

4. Seventy percent of all purchases are paid in the month of purchase; the remaining 30% are paid in the subsequent month.

5. Watson's product requires 30 minutes of direct labor time. Each hour of direct labor costs $7. Instructions: a. Rounding computations to the nearest dollar, prepare the following for January through March:

1) Sales budget

2) Schedule of cash collections

3) Production budget

4) Direct material purchases budget

5) Schedule of cash disbursements for material purchases

Reference no: EM13480043

Questions Cloud

Exercise 16-2 determining the present value of a lump-sum : exercise 16-2 determining the present value of a lump-sum future cash receipt stan sweeney turned 20 years old today.

For the fiscal year ended june 30 2012 calculate the : long-term debtnbspnbspnbspnotes payable 101089000nbspnbspnbsp8 convertible bonds payable5185000nbspnbspnbsp10 bonds

Arrow enterprises uses a standard costing system the : arrow enterprises uses a standard costing system. the standard cost sheet for product no. 549 follows. direct materials

A fellow student says to you the statement of cash flows is : 1. a fellow student says to you the statement of cash flows is the easiest of the basic financial statements to prepare

All sales are made on account at 20 per unit sixty percent : the balance sheet of watson company as of december 31 19x1 follows. watson company balance sheet december 31 19x1

In your posting please articulate issues that the : in 200 words or more discuss the issues that relate to the accounting for operating and capital leases.in your posting

Prepare the journal entrys to record paynes income taxes : deferred tax asset taxable income given valuation allowance at the end of 2012 payne industries had a deferred tax

Sugarland company sells a single product and anticipates : sugarland company sells a single product and anticipates opening a new facility in charlotte on may 1 of the current

Lance lawn services reports warranty expense by estimating : temporary difference future deductible amounts taxable income given lance lawn services reports warranty expense by

User Account

All Pages