[The following information applies to the questions displayed below.]Leach Inc. experienced the following events for the first two years of its operations:Year 1:1. Issued $10,000 of common stock for cash.2. Provided $78,000 of services on account.3. Provided $36,000 of services and received cash.4. Collected $69,000 cash from accounts receivable.5. Paid $38,000 of salaries expense for the year.6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivablebalance will be uncollectible.7. Closed the revenue account.8. Closed the expense account.Year 2:1. Wrote off an uncollectible account for $650.2. Provided $88,000 of services on account.3. Provided $32,000 of services and collected cash.4. Collected $81,000 cash from accounts receivable.5. Paid $65,000 of salaries expense for the year.6. Adjusted the accounts to reflect uncollectible accounts expense for the year. Leach estimates that 5 percent of the ending accounts receivable balancewill be uncollectible. Cash budgeting, budgeted balance sheet (Continuation of 6 -42) (Appendix) Refer to the information in Problem $6-42$ Budgeted balances at January 31,2018 are as follows: Customer invoices are payable within 30 days. From past experience, Skulas's accountant projects $40 \%$ of invoices will be collected in the month invoiced, and $60 \%$ will be collected in the following month. Accounts payable relates only to the purchase of direct materials. Direct materials are purchased on credit with $50 \%$ of direct materials purchases paid during the month of the purchase, and $50 \%$ paid in the month following purchase. Fixed manufacturing overhead costs include $ 64,000$ of depreciation costs and fixed nonmanufacturing overhead costs include $ 10,000$ of depreciation costs. Direct manufacturing labor and the remaining manufacturing and nonmanufacturing overhead costs are paid monthly. All property, plant, and equipment acquired during January 2018 were purchased on credit and did not entail any outflow of cash. There were no borrowings or repayments with respect to long-term liabilities in January 2018 On December $15,2017,$ Skulas's board of directors voted to pay a $ 160,000$ dividend to stockholders on January 31,2018 1. Prepare a cash budget for January $2018 .$ Show supporting schedules for the calculation of collection of receivables and payments of accounts payable, and for disbursements for fixed manufacturing and nonmanufacturing overhead. 2. Skulas is interested in maintaining a minimum cash balance of $ 120,000$ at the end of each month. Will Skulas be in a position to pay the $ 160,000$ dividend on January $31 ?$ 3. Why do Skulas's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? 4. Prepare a budgeted balance sheet for January 31,2018 by calculating the January 31,2018 balances in (a) cash (b) accounts receivable (c) inventory (d) accounts payable and (e) plugging in the balance for stockholders' equity. Recommended textbooks for you  FINANCIAL ACCOUNTING ISBN:9781259964947 Author:Libby Publisher:MCG Accounting ISBN:9781337272094 Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E. Publisher:Cengage Learning, Accounting Information Systems ISBN:9781337619202 Author:Hall, James A. Publisher:Cengage Learning, Horngren's Cost Accounting: A Managerial Emphasis... ISBN:9780134475585 Author:Srikant M. Datar, Madhav V. Rajan Publisher:PEARSON Intermediate Accounting ISBN:9781259722660 Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas Publisher:McGraw-Hill Education Financial and Managerial Accounting ISBN:9781259726705 Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles Publisher:McGraw-Hill Education FINANCIAL ACCOUNTING ISBN:9781259964947 Author:Libby Publisher:MCG Accounting ISBN:9781337272094 Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E. Publisher:Cengage Learning, Accounting Information Systems ISBN:9781337619202 Author:Hall, James A. Publisher:Cengage Learning, Horngren's Cost Accounting: A Managerial Emphasis... ISBN:9780134475585 Author:Srikant M. Datar, Madhav V. Rajan Publisher:PEARSON Intermediate Accounting ISBN:9781259722660 Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas Publisher:McGraw-Hill Education Financial and Managerial Accounting ISBN:9781259726705 Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles Publisher:McGraw-Hill Education |
Leach incorporated experienced the following events for the first two years of its operations
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