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EXERCISE 7.

3) The company "Leader SA" presents its balance sheet at December 31, 2001 and calls for the preparation of the statement of for 2002:

BALANCE SHEET
At December 31, 2001 ASSETS CURRENT Cash Customers Finished Goods Inventory TOTAL CURRENT NO CURRENT Ground Building and Equipment Accumulated Depreciation TOTAL NON-CURRENT LIABILITIES SHORT TERM suppliers Notes payable

$ $ $ $

2,000 15,000 5,000 22,000

LONG-TERM Obligations payable $ $ $ $ 43,000 40,000 5,000 78,000

CAPITAL ACCOUNTANT Capital contributed Capital cattle

TOTAL ASSETS

100,000

TOTAL LIABILITIES + HERITAGE

It also provides the following information: 1) The sales budget is $ 90,000 budgeted Sales = $ 90,000

2)The materials budget required is equal to 25% of sales budget budgeted Sales = Required MP = Required MP = 3) The materials purchases budget is $ 32,000 $ 90,000 25% Ventas presupuestadas 22,500

Purchase Materials = 4)The work budget is equal to 30% of budgeted sales budgeted Sales = Labor = Labor =

32,000

90,000 30% Ventas presupuestadas 27,000

5) The budget of indirect manufacturing costs is 10% higher than the labor budgeted Sales = Labor = Labor= $ 90,000 30% budgeted Sales 27,000 Indirect manufacturing costs = Indirect manufacturing costs = Indirect manufacturing costs =

6) The operating expense budget is $ 7000 Operating Expenses = Depreciation budgeted = Operating Expenses = $ $ 7,000 Con deprec $ 2,000 5,000 sin deprec

7) The desired ending inventory of finished goods is $ 4,600 Desired Ending Inventory of Finished Goods = $ 4,600

8) 85% of 2002 sales are charged in that period while 15% will be charged on the following collection: 2002 = 2003 = 85% 15% Sales Sales 2002 2003 90,000 $ 76,500 $ 13,500

budgeted Sales 9) The 2001 account customers will be charged in 2002 Account Customers 2001 = TOTAL

10) It will pay 80% of purchases of materials in 2002. The remaining 20% will be paid in the next period Payments: 2002 = 2003 = 80% 20% Purchase Materials Purchase Materials 2002 2003

Compra de Materiales

32,000 $

25,600 $

6,400

11)The budgeted depreciation is $ 2000 (corresponds to GIF) Depreciation budgeted = $ 12) It will borrow $ 15,000 short-term Short term loan = 13)They settled accounts payable 2001 pay Suppliers 2001 = $ $ 15,000 2,000

14) The minimum cash balance that must be maintained is $ 2000 Minimum cash balance = $ 2,000

PERFORM: Prepare the Statement of Financial Position budgeted for 2002

EXERCISE SOLUTION 7.3


STATEMENT Sales (-) Cost of Sales (=)Gross profit on sales (-) Operating Expenses (=) Operating Income COST OF SALES BUDGETED Raw Material Used (+) Direct Labor (+) Manufacturing expenses (=)COST OF PRODUCTION (+) Opening Stock of Finished Goods (=) Finished Goods Available (-) Finished Goods Ending Inventory (=) COST OF SALES

COST OF SALES BUDGETED


El Lder S.A
to December 31, 2002 Raw Material Used (+) Direct Labor (+) Manufacturing expenses (=) COST OF PRODUCTION (+) Inventory Initial Finished Products (=) Finished Goods Available (-) Inventory Final of finished products (=) COST OF SALES

STATEMENT
El Lder S.A
to December 31, 2002 Sales (-) Cost of Sales (=) Gross profit on sales (-) Operating Expenses (=) Operating Income $ $ $ $ $ 90,000 (79,600) 10,400 (7,000) 3,400

CASH FLOW BUDGET


El Lder S.A
to December 31, 2002 TICKETS Deferred revenues Collections of Cts x charge last year (2001) loan TOTAL ENTRIES DEPARTURES Payments purchase of materials Accounts payable payment year (2001) Salaries Manufacturing expenses Operating Expenses TOTAL OUTPUT (=) DIFFERENCE (+) Initial Balance

(=) Surplus or missing (+) Funding (=) BALANCE AL 31/12/2002

BALANCE SHEET BUDGETED


El Lder S.A
Al 31 de Diciembre de 2002 ASSETS CURRENT cash customers Final Inventory of RM Final Inventory of Pro. Fin. TOTAL CURRENT NO CURRENT ground Building and Equipment Accumulated Depreciation TOTAL NON-CURRENT LIABILITIES SHORT TERM suppliers Notes payable

$ $ $ $ $ $ $ $ $

2,000 13,500 9,500 4,600 29,600 43,000 40,000 (7,000) 76,000

LONG-TERM Obligations payable

CAPITAL ACCOUNTANT Capital contributed Capital cattle

TOTAL ASSETS

105,600

TOTAL LIABILITIES + HERITAGE

nd calls for the preparation of the statement of financial position budgeted

SHEET
31, 2001

Notes payable TOTAL SHORT TERM

$ $ $

30,000 5,000 35,000

Obligations payable TOTAL LIABILITIES CAPITAL ACCOUNTANT Capital contributed TOTAL CAPITAL TOTAL LIABILITIES + HERITAGE

$ $

5,000 40,000

$ $ $ $

40,000 20,000 60,000 100,000

$ $

10% > MO 2,700 (+MO) 29,700

TOTAL $ 90,000

paid in the next period

TOTAL

32,000

N 7.3
COST OF SALES BUDGETED Raw Material Used (+) Direct Labor (+) Manufacturing expenses (=)COST OF PRODUCTION (+) Opening Stock of Finished Goods (=) Finished Goods Available (-) Finished Goods Ending Inventory (=) COST OF SALES

BUDGETED
S.A
31, 2002 $ $ $ $ $ $ $ $ 22,500 27,000 29,700 79,200 5,000 84,200 (4,600) 79,600

MENT
S.A
31, 2002

BUDGET
S.A
31, 2002 2002 76,500 15,000 15,000 106,500

$ $ $ $

$ $ $ $ $ $ $ $

25,600 30,000 27,000 29,700 5,000 117,300 (10,800) 2,000

$ $ $

(8,800) 10,800 2,000

T BUDGETED
S.A

bre de 2002

Notes payable TOTAL SHORT TERM

$ $ $

6,400 30,800 37,200

Obligations payable TOTAL LIABILITIES CAPITAL ACCOUNTANT Capital contributed TOTAL CAPITAL TOTAL LIABILITIES + HERITAGE

$ $

5,000 42,200

$ $ $ $

40,000 23,400 63,400 105,600