The balance sheet of watson company as of december 31 20x1

Assignment Help Accounting Basics

Reference no: EM13578307

The balance sheet of Watson Company as of December 31, 20X1, follows.

WATSON COMPANY
Balance Sheet
December 31, 12X1
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 20X2 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
6) Direct labor budget

b. Determine the balances in the following accounts as of March 31:

1) Accounts Receivable

2) Direct Materials

3) Accounts Payable

Reference no: EM13578307

Questions Cloud

Required assuming the company produced and sold 5000 units : the cost accountant for the larsen manufacturing co. has provided you with the following information for the month of

Show a frequency distribution and percent frequency : the higher education research institute at ucla provides statistics on the most popular majors among incoming college

Calculate operating income if the selling price is raised : miller metal company makes a single product that sells for 32 per unit. variable costs are unit abd fixed costs total

Lots corporation uses the accounts receivable aging method : lots corporation uses the accounts receivable aging method to account for uncollectible accounts expense. as of

The balance sheet of watson company as of december 31 20x1 : the balance sheet of watson company as of december 31 20x1 follows. watson companybalance sheetdecember 31

Net income was 150000 in 2007 and 180000 in 2008 each : eagle franks and gordon formed a partnership on january 1 2007 with investments of 100000 150000 and 200000

The median property tax rate per 1 000 value for state a : the median property tax rate per 1 000 value for state a is 21 .42. a family is considering moving to state b and

Prepare a bank reconciliation for motts company as of april : the following information pertains to the bank transactions of motts companya. cash on the books as of april 30 was

At the 005 level of significance is there evidence that : question late payment of medical claims can add to the cost of health care. an article m. freudenheim the check is

User Account

All Pages