the management of Babalu Musical Instrument Co., a new merchandising company, prepared the following estimated balance sheet for December 31,

profileCA_experts4u
 (Not rated)
 (Not rated)
Chat
Home>Homework Answsers>Business & Finance homework help>Accounting homework help

Near the end of 2017, the management of Babalu Musical Instrument Co., a new merchandising company, prepared the following estimated balance sheet for December 31, 2017.

http://www.chegg.com/homework-help/questions-and-answers/create-budgeted-balance-sheet-information-q22051053

 

[removed]
 

BABALU MUSICAL INSTRUMENT COMPANY Estimated Balance Sheet er 31, 201 Assets Liabilities and Equity Cash $37,000 Accounts payable S365,000 Accounts receivable 520,000 Bank loan payable 15,000 Taxes payabl Inventory 35,000 92,000 (due 3/15/2018) Total current assets 692,000 Total liabilities $472,000 Equipment $543,000 n stock 471,000 Less 67,8750 224,125 475,125 Retained earnings accumulated depreciatiom Total stockholders equity 695,125 si,167,125 Total liabilities and equity si 167,125 Total assets To prepare a master budget for January, February, and March of 2018, management gathers the following information. Babalu Musicals si gle prod uct is purchased for $30 per unit and resold for S57 per unit. The expected inventory managements desired level for 2018, level of 4.500 uni ts on December 31, 2017, is more than which is 20% of the next months expected sales (in units). Expected sales are: January, 7,500 units; February, 9,500 units; March, l 1,500 units; and April, 9,500 units b. Cash sales and credit sales represent 30% and 70% respectively, oftotal sales. Ofthe credit sales, 70% is collected in the first month after the month of sale and 30% in th e second month after the month of sale. For the December 31, 2017, accounts receivable balance $125,000 is collected in January and the remaining S395,000 is collected in February. e. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second mon h after the month of purchase. For the December 31, 2017, accounts payable balance, S80,000 is paid in January and the remaining S285,000 is paid in February. d. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are S84,000 per year. e. General and administrative salaries are 44,000 per year. Maintenance expense equals S2,200 per month and is paid in cash. f Equipment reported in the December 31, 2017, balance sheet was purchased in January 2017. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, S34,000; February, $96,000, and March, $28,500. This equipment will be depreciated under the straight. ne method over eight years with no salvage value full months depreciation is taken for the month in which equipment is purchased g. The company plans to acquire land at the end of March at a cost of si45,000, which wi be paid with cash on the ast day of the month. h. Babalu Musical has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments these loans can be made on the last day of the month. The company has agreed to maintain a min mum ending cash balance of S54,400 in each month. i. The income tax rate for the company is 30%. Income taxes on the first quarters income wil not be paid April 15

    • 9 years ago
    Report issue
    the management of Babalu Musical Instrument Co., a new merchandising company, prepared the following estimated balance sheet for December 31,
    NOT RATED

    Purchase the answer to view it

    blurred-text
    • attachment
      near_the_end_of_2015_the_management_of.xlsx