moon trust bank has asked the president of wish ware products inc for a budgeted inc 544716

Budgeted Income Statement and Budgeted Balance Sheet

Moon trust Bank has asked the president of Wish ware Products, Inc., for a budgeted income statement and budgeted balance sheet for the quarter ended June 30. These pro forma financial statements are needed to support Wish ware Products’ request for a loan.

Wish ware Products routinely prepares a quarterly master budget. The operating budgets prepared for the quarter ending June 30 have provided the following information: Projected sales for April are $220,400; for May, $164,220; and for June, $165,980. Direct materials purchases for the period are estimated at $96,840; direct materials usage, at $102,710; direct labor expenses, at $71,460; overhead, at $79,940; selling and administrative expenses, at $143,740; capital expenditures, at $125,000 (to be spent on June 29); cost of goods manufactured, at $252,880; and cost of goods sold, at $251,700.

Balance sheet account balances at March 31 were as follows: Accounts Receivable, $26,500; Materials Inventory, $23,910; Work in Process Inventory, $31,620; Finished Goods Inventory, $36,220; Prepaid Expenses, $7,200; Plant, Furniture, and Fixtures, $498,600; Accumulated Depreciation–Plant, Furniture, and Fixtures, $141,162; Patents, $90,600; Accounts Payable, $39,600; Notes Payable, $105,500; Common Stock, $250,000; and Retained Earnings, $207,158.

Projected monthly cash balances for the second quarter are as follows: April 30, $20,490; May 31, $35,610; and June 30, $45,400. During the quarter, accounts receivable are expected to increase by 30 percent, patents to go up by $6,500, prepaid expenses to remain constant, and accounts payable to go down by 10 percent (Wish ware Products will make a $5,000 payment on a note payable, $4,100 of which is principal reduction). The federal income tax rate is 34 percent, and the second quarter’s tax is paid in July. Depreciation for the quarter will be $6,420, which is included in the overhead budget. The company will pay no dividends.

Required

1. Prepare a budgeted income statement for the quarter ended June 30. Round answers to the nearest dollar.

2. Prepare a budgeted balance sheet as of June 30.