Assets

Liabilities + Owner's Equity

Cash

Accounts Payable

+
$
118,440 $
$
264,000 $
$ 2,604,000 $
$
$
$
$
$
$
$
$

-

-

144,000
78,000
492,000
198,000
49,200
135,600
522,000
38,400
788,400
9,000
36,000

$

+

788,400 $
$
$

185,760
825,000
66,000

$
788,400 $
Notes Payable

1,076,760

-

+
$
$

288,840
264,000

$
$
Interest on Loans

552,840

-

+
$

$ 2,986,440 $ 2,490,600 $

38,400

495,840
Sales

-

Accounts Receivables

+

-

$
311,760 $
19,200
$ 2,562,000 $
49,200
$ 2,604,000
$ 2,873,760 $ 2,672,400 $
Sales Returns & Allowances

+
$
$

201,360

$

2,562,000

$

1,806,624

COGS

-

+

-

19,200
49,200

Discounts

+

Income Taxes Payable

-

Selling & Admin Expense

+
$

+

-

+

$

9,000

$
$

9,000
58,000

$

9,000 $

67,000

-

522,000
Depreciation Expense

Finished Goods Inventory

+

+

-

$
257,040 $ 1,806,624
$ 1,901,952
Retained Earnings

$ 2,158,992 $ 1,806,624 $
Work in Process Inventory

+

-

$
172,200
$
811,000
$ 1,129,200

$ 1,901,952

352,368

$

+

36,000 $
$

829,560
68,576

$
36,000 $
Capital Stock

898,136

-

+
$

$ 2,112,400 $ 1,901,952 $
Materials

+
$
$
$

110,520 $
825,000
935,520 $

1,512,000

(210,448)

-

-

+

-

+

-

-

+

-

-

+

-

-

+

811,000
811,000 $

124,520

Direct Manufacturing Labor

+
$

-

492,000

Factory Overhead
Indirect Manufacturing Labor

+
$

198,000

Power, heat & light

+
$

135,600

Social Security Taxes

+
$

49,200

Prepaid Taxes & Insurance, factory

$
$

+

-

66,720 $
78,000

52,800

$
144,720 $
Supplies
$
$

52,800 $

+

-

17,280 $
66,000

61,200

$
83,280 $
Plant & Equipment

+
$ 2,678,400 $
$
144,000 $

61,200 $

91,920

22,080

907,200
140,400

$ 2,822,400 $ 1,047,600 $

1,774,800

$

288,360

$

552,840

$

58,000

$

862,136

$

58,000

Browning Manufacturing Company
Statement of Cost of Goods Sold (Schedule 1)
For the Year ended December 31, 1998

Finished goods inventory 1/1/98
Work in process inventory 1/1/98
Materials used
Plus: Factory expenses
Direct Manufacturing Labor
Factory overhead
Indirect manufacturing labor
Power, heat and light
Depreciation of plant
Social Security Taxes
Taxes and insurance, factory
Supplies
Less: Work in process inventory 12/31/98
Cost of goods manufactured (completed)
Less: Finished goods inventory 12/31/98
Cost of goods sold

COST OF SALES AND INVENTORIES

$
$
$
$
$
$

198,000
135,600
140,400
49,200
52,800
61,200

$
$

172,200
811,000

$

492,000

$
$
$

637,200
2,112,400
210,448

$

257,040

$
$
$
$

1,901,952
2,158,992
352,368
1,806,624

GROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Browning Manufacturing Company
Projected Income Statement
For the Period Ended 12/31/1998

Sales
Less: Sales returns and allowances
Sales discounts allowed
Net Sales
Less: Cost of goods sold (Schedule 1)
Gross Margin
Less: Selling and administrative expense
Operating Income
Less: Interest Expense
Income before federal and state income tax
Less: Estimated income tax expense
Net Income

COST OF SALES AND INVENTORIES

$
$

19,200
49,200

$

2,562,000

$
$
$
$
$
$
$
$
$
$

68,400
2,493,600
1,806,624
686,976
522,000
164,976
38,400
126,576
58,000
68,576

GROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Browning Manufacturing Company
Projected Balance Sheet
For the Period Ended December 31, 1998
Assets
Current assets:
Cash and marketable securities
Account receivable (net of allowance for doubtful accounts)
Inventories:
Materials
$
Less: Cost of goods sold (schedule 1)
$
Finished Goods
$
Supplies
$
Prepaid taxes and insurance
Total current assets
Other assets:
Manufacturing plant at cost
Less: Accumulated depreciation
Total Assets

124,520
210,448
352,368
22,080

$
$

2,822,400
1,047,600

Current liabilities:
Accounts payable
Notes payable
Income taxes payable
Total current liabilities

$
$
$

288,360
552,840
58,000

Shareholders' equity:
Capital stock
Retained earnings
Total Liabilities and Shareholders' Equity

$
$

$
$

495,840
201,360

$
$
$

709,416
91,920
1,498,536

$
$

1,774,800
3,273,336

$

899,200

$
$

2,374,136
3,273,336

Liabilities and Shareholders' Equity

COST OF SALES AND INVENTORIES

1,512,000
862,136

GROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Browning Manufacturing Company
Projected Income Statement
For the Period Ending December 31, 1988
(Schedule 1)

NET SALES
COST OF GOODS SOLD
MATERIALS COST:
Materials Inventory, January 1
Purchases
Plus: Freight-in
Total Purchases
Materials Available
Less: Materials Inventory, Dec. 31
COST OF MATERIALS USED
DIRECT LABOR COST
MANUFACTURING OVERHEAD COST:
Indirect Labor
Factory Heat, Light and Power
Factory Supplies Used
Insurance & Taxes, Factory
Social Security Taxes
Depreciation - Plant & Equipment
TOTAL MANUFACTURING OVERHEAD COST
TOTAL MANUFACTURING COST
ADD: Work in Process Inventory, Jan 1
TOTAL:
LESS: Work in Process Inventory, Dec. 31
COST OF GOODS MANUFACTURED
ADD: Finished Goods Inventory, Jan. 1
COST OF GOODS AVAILABLE FOR SALE
LESS: Finished Goods Inventory, Dec. 31
LESS: COST OF GOODS SOLD
Gross Margin
Less: Selling & Administrative Expense
Operating Profit
Interest Expense
Income before Income Taxes
Provision for Income Tax
NET INCOME

COST OF SALES AND INVENTORIES

$2,493,600.00
$

110,520.00

825,000.00
825,000.00
935,520.00
(124,520.00)
811,000.00
492,000.00
198,000.00
135,600.00
61,200.00
52,800.00
49,200.00
140,400.00
637,200.00
1,940,200.00
172,200.00
2,112,400.00
(210,448.00)
1,901,952.00
257,040.00
2,158,992.00
(352,368.00)
(1,806,624.00)
686,976.00
(522,000.00)
164,976.00
(38,400.00)
126,576.00
(58,000.00)

$

68,576.00

GROUP1: JENICE JOY SUMAWAY and MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Less: Sales returns and allowances
19,200.00
Sales discounts allowed
49,200.00
Net Sales
Less: Cost of goods sold (per schedule)
Gross Margin
Less: Selling and administrative expense
Operating Income
Less: Interest Expense
Income before federal and state income tax
Less: Estimated income tax expense
Net Income

COST OF SALES AND INVENTORIES

68,400.00
2,425,200.00
1,806,624.00
618,576.00
522,000.00
96,576.00
38,400.00
58,176.00
58,000.00
176.00

GROUP1: JENICE JOY SUMAWAY and MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Browning Manufacturing Company
Case Analysis
2. Exhibit 1 - Projected Balance Sheet, December 31, 1997 vs December 31, 1998
1997

1998

INC/DEC

Assets
Cash & marketable securities

$

118,440

$

495,480

318%

Account receivable

$

311,760

$

201,360

55%

Materials

$

110,520

$

124,520

13%

Work in process

$

172,200

$

210,448

22%

Finished goods

$

257,040

$

352,368

37%

Supplies

$

17,280

$

22,080

28%

Prepaid taxes and insurance

$

66,720

$

91,920

38%

Inventories:

1997

1998

POS/NEG

Liabilities
Account Payable

$

185,760

$

288,360

Notes Payable

$

288,840

$

552,840

55%
91%

Income Taxes Payable

$

9,000

$

58,000

544%

Shareholders' equity

$

2,341,560

$

2,374,136

1%

Capital Stock

$

1,512,000

$

1,512,000

0%

Retained earnings

$

829,560

$

862,136

4%

2. Exhibit 2 - Statement of Cost of Goods Sold, Projected 1997 vs Projected 1998
1997

1998

%

Finished goods inventory

$

257,040

$

352,368

37%

Work in process inventory

$

172,200

$

210,448

22%

Materials used

$

663,120

$

811,000

22%

Direct Manufacturing Labor

$

419,040

$

492,000

17%

Indirect manufacturing labor

$

170,640

$

198,000

16%

Power, heat and light

$

116,760

$

135,600

16%

Depreciation of plant

$

126,600

$

140,400

11%

Social Security Taxes

$

42,120

$

49,200

17%

Taxes and insurance, factory

$

46,320

$

52,800

14%

Supplies

$

56,880

$

61,200

8%

$

1,568,280

$

1,806,624

15%

INC/DEC

Factory Overhead

Cost of Goods Sold

2. Exhibit 3 - Projected Income Statement, Projected 1997 vs Projected 1998
1997

1998

%

Sales

$

2,295,600

$

2,562,000

Sales returns and allowances

$

17,640

$

19,200

-8%

Sales discounts allowed

$

43,920

$

49,200

-11%

Net sales

$

2,234,040

$

2,493,600

12%

Cost of Goods Sold

$

1,568,280

$

1,806,624

15%

Gross Margin

$

665,760

$

686,976

3%

Selling and administrative expenses

$

437,160

$

522,000

-16%

Operating income

$

228,600

$

164,976

-28%

Interest expense

$

34,080

$

38,400

-11%

194,520

$

126,576

-35%

Income before federal and state income$tax
Estimated income tax expense

$

89,520

$

58,000

54%

Net Income

$

105,000

$

68,576

-35%

COST OF SALES AND INVENTORIES

POS/NEG

12%

GROUP1: JENICE JOY SUMAWAY and MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

Days receiveable in 1998 improved from 49 days to 29 days

3. The budget indicate that Browning Manufacturing Company fail to achieve its goal of at least
$350,000 repayment for notes payable and have a year-end cash balance of $150,000.
The budget shows that after repaying $350,000, year-end cash balance will fall at $145,840, short of $4,160.
To be able to achieve this goal, Browning Manufacturing company must work more in their collection,
convert at least 3%-5% ($6,000 - $10,068)of accounts receivables to cash. Doing this, year-end cash balance
will be at $151,480 - $155,548.

4. Inventory turnover ratio decrease from 2.8 to 2.5 or 146 days
Align production based on the avergae cost of good sales.

5. Accounts payable increased by 55% which is negative impact to suppliers.
Increasing Brownings the hanging balance in suppliers, less credit limit, which is risky on the supplier part.

COST OF SALES AND INVENTORIES

GROUP1: JENICE JOY SUMAWAY and MIKE AGENCIA
BM 220 --- PROF. TRINIDAD

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