Week 4 Assignment from Textbook

Week 4 Assignment from Textbook: Chapter 23 & 24
Esther Tate
ACC/400
July 26, 2015
Theresa Pekron

Brief Exercise 23.6 – Elements of the Budget
Identify the budgets in Column B from which dollar amounts are transferred directly in constructing the budgets listed in Column A:

1. Budgeted income statement
a. Direct materials budget
2. Budgeted balance sheet
b. Cost of goods sold budget
3. Cash flow budget
c. Production budget
4. Cost of goods sold budget
d. Payables budget
5. Production budget
e. Sales budget
6.
f. Budgeted income statement

1. Budgeted income statement – e. Sales budget
2. Budgeted balance sheet – d. Payables budget
3. Cash flow budget – a. Direct materials budget
4. Cost of goods sold budget – b. Cost of goods sold budget
5. Production budget – c. Production budget
Exercise 23.1 – Budgeting Purchases and Cash Payment
The following information is from the manufacturing budget and the budgeted financial statements of Fabor Fabrication:

Direct materials inventory Jan.1…….……………………………………. $73,000
Direct materials inventory Dec.31……………………………………… 85,000
Direct materials budgeted for use during the year……………………… 264,000
Accounts payable to suppliers of materials Jan.1……………………… 46,000
Accounts payable to suppliers of materials Dec.31……………………… 77,000

Compute the budgeted amounts for:

a. Purchases of direct materials during the year
= Direct Materials Budgeted Consumption (Closing Inventory – Opening inventory)
= $264,000 – (85,000 – 73,000)
= $264,000 – 12,000
= $252,000

b. Cash payments during the year to suppliers of materials
= $264,000 – (77,000-46,000)
= $264,000 – 31,000
= $233,000

Exercise 23.8 – Budgeting Cash Receipts
Sales on account for the first two months of the current year are budgeted as follows:
Jan……………………………………… $800,000
Feb……………………………………… 880,000
All sales are made on terms of 2/10, n/30 (2% discount if paid in 10 days, full amount by 30 days); collection on accounts receivable are typically made