Copies of errors and corrections for your review

  

Attached are copies of Quik Flik Budget for your review.

 

One is what you provided me with, the other is my edited version of what you provided me with according to the instructions the highlighted areas are where the errors are and correcrtions are noted to the right of the error. Please feel free to get in touch regarding any disagreement you may have, but I do think I am correct here. I do not necessarily want a refund we can work something out but a refund is also fine or a portion there too. I would rather we come up with an arrangement than a refund though. so let me know.

 

Thanks Robin Vanderhoeven

CHAPTER 22 – Part 1

THE MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

Read chapter 22

Workpaper Problem- Part 1: (10 pts)

You will be completing a master budget in a continuing problem through this unit and the next using Excel. An example of the master budget format is found in the Summary Problem 22-1 on pages 1061-1062 and continued in the Summary Problem 22-2 on pages 1069-1072. We will cover this in TWO UNITS.

Remember to include proper headings for all schedules, rows and columns (yours will not be “revised” though). As always, some of the given information may be a little different than the Summary Problem. You will need to make the best decision on how to handle that.

You may click on Quik-Flik Comprehensive Problem (Unit 8 Master Budget Project Financial Information) and print it out to get the whole assignment.
You are to prepare the following budgets for the second quarter (April, May, June)…

Part 1: The Operating Budget (Due this week)

Sales Budget
Inventory, Purchases, and

Cost of Goods Sold

Budget
Operating Expenses Budget
Budgeted Income Statement

Hint: when preparing your Income Statement, the Interest Expense is $3,018. This will not be calculated until Part 2, but you should put that in as a given.

Part 2: The Financial Budgets (This will not be due until the subsequent week)

Budgeted

Cash

Collections from Customers
Budgeted Cash Payments for Purchases
Budgeted Cash Payments for Operating Expense
Cash Budget
Budgeted

Balance Sheet

Budgeted Statement of

Cash Flows

Please remember to put your name on your assignment.

I will be providing feedback on Part 1 so that if there are any errors in your Operating Budgets, you will know what they are so that you can go forward in Part 2 using the correct Operating Budget amounts. If you want to start on Part 2 and I have not graded your Part 1, please send me an email asking that I complete your Part 1 grade because you are ready to go on and I will be happy to do that.

NO EXAM THIS UNIT – There will be an exam on all of chapter 22 in the subsequent unit.

 

Quik-Flik  Company
Master  Budget Project

You have just been hired as a new management trainee by Quik-Flik Company, a nationwide distributor of a revolutionary new cigarette lighter. The company has an exclusive franchise on distribution of the lighter, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given direct responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1, 2006. You are anxious to make a favorable impression on the president and have assembled the information below.

Sales data:
The lighters are forecast to sell for $8 each. Recent forecast and/or actual sales in units are:

January (actual) 20,000	April – 35,000	July – 40,000
February (actual) 24,000	May – 45,000	August – 36,000
March (actual) 28,000	June – 60,000	September – 32,000

All sales are on credit (no cash sales). When preparing the Sales Budget, instead of showing the cash sales, credit sales and total sales, you will be creating a sales budget illustrating the budgeted units, the price per unit and then the total credit sales estimated. Just a reminder, you are only doing three months and then the total for the quarter.

Inventory, Purchases and Cost of Goods Sold:

The large buildup in sales before and during the month of June is due to Father’s Day. The lighters cost the company $5 each. Ending inventories are supposed to equal 90 percent of the next month’s sales in units. Remember, the desired ending inventory value is always expressed in terms of the cost ($5) of the lighters.

Operating Expenses:

The company’s monthly operating expenses are given below:
Variable:
        Sales Commissions …………  $1 per lighter
Fixed:
        Wages and salaries……………     22,000
        Utilities………………………………      14,000
        Insurance expired……………….        1,200
        Depreciation………………………         1,500
         Miscellaneous……………………         3,000

Income Statement:

For purposes of completing part 1 – the interest expense from the revised cash budget will be a given.

Interest Expense for the quarter is $3,018. 

Cash Collections:

All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected by month-end. An additional 50% is collected in the month following, and the remaining 25% is collected in the second month following. Bad debts have been negligible.

Cash payments for purchases:

Purchases are paid for as follows: 50% in the month of the purchase and the remaining 50% in the following month.

Cash payments for operating expenses:

All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired.

Cash Budget:

 New fixed assets will be purchased during May for $25,000 cash. The company declares dividends of $

12,000

each quarter, payable in the first month of the following quarter.
The company desires a minimum ending cash balance each month of $10,000.(If borrowing is required, borrow just enough to get to an ending cash balance of $10,000 and no more.) The company can borrow money from its bank at 12% annual interest. All borrowing must be done at the beginning of a month, and repayments must be made at the end of a month. Repayments of principal must be in round $1,000 amounts. (Principal and interest will not be in $1,000 amounts. Remember when calculating interest on each borrowing to include the month it was borrowed plus the month(s) that balance was outstanding.) Interest is computed and paid at the end of each quarter on all loans outstanding during the quarter. Round all interest payments to the nearest whole dollar. Compute interest on whole months (1/12, 2/12 and so forth). The company wishes to use any excess cash to pay loans off as rapidly as possible.

Balance Sheet:

The company’s balance sheet at March 31 is given below:

Assets:

Cash

$     14,000

Accounts Receivable

$48,000 February sales; 25% of the total remains, 
$168,000 March sales; 75% of the total remains

216,000

Inventory      (31,500 units)

 157,500

Unexpired insurance

14,400

Fixed assets, net of depreciation

172,700

Total Assets

$   574,600

Liabilities and Stockholders’ Equity:

Accounts payable,  (purchases)

$      85,750

Dividends payable

12,000

Short-term notes payable

-0-

Capital stock, no par

300,000

Retained earnings

176,850

Total Liabilities and Stockholders’ Equity

$    574,600

Income taxes are the responsibility of corporate headquarters, so you can ignore tax for budgeting purposes.

You are to complete a master budget for the Quik-Flik Company for the second quarter April – June, 2006 in two parts. 

Part 1:
An example of the operating budget format I expect you to use can be found in the Mid-Chapter Summary Problem.

Part 2: 
An example of the financial budget format I expect you to use can be found in the End-of-Chapter Summary Problem.

I expect all headings to be included for each schedule and good descriptions to precede the amounts in the columns. Some of the given information will be a little different than the summary problem, however, you will need to make decisions on the best approach to handle that.

 
 
 

CHAPTER 22-Part 2

THE MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

Read chapter 22

Workpaper Problem: (15 pts)

In the last unit you prepared the Operating Budgets for Quik-Flik. You will be continuing with this master budget using excel. An example of this section of the master budget format is found in the Summary Problem 22-2 on pages 1069-1072.

Remember to include proper headings for all schedules, rows and columns (yours will not be “revised” though). Some of the given information may be a little different than the Summary Problem. You will need to make the best decision on how to handle that, but follow the hints below.

Your assignment is to prepare the following budgets for the second quarter (April, May, June)….

Part 2: The Financial Budgets
Budgeted Cash Collections from Customers
Budgeted Cash Payments for Purchases
Budgeted Cash Payments for Operating Expense
Cash Budget
Budgeted
Balance Sheet
Budgeted Statement of Cash Flows

Please remember to put your name on your assignment. Read my comments from the grade book on Part 1 and be sure to use corrected figures for the Operating Budget as you go forward.

Here are a few hints:

1. When figuring the April collections, notice that just 25% of the current months sales (April sales) will be collected in April, along with 50% of the prior months sales (March sales) , and 25% of the month before that (Feb).

2. The amount borrowed in April should be $47,750 (the exact amount needed to get to the $10,000 cash balance) and will be repaid in June. When calculating the interest on the April money borrowed, the time will be 3/12 because the money is borrowed at the beginning of April and repaid at the end of June, hence 3/12. Next, again, borrow just enough to get to a cash balance of $10,000, and once again this amount will be repaid in June. To calculate the interest, (p x r x t), the time will be 2/12 on the May

financing

. Keep in mind, the money is borrowed at the beginning of May and repaid at the end of June. In the example in your book, the borrowing was always at the end of the month and the borrowing was in multiples of $1000. The instructions for this part are just a little different than the example in your text.

3. When writing your balance sheet, you will find it easier to determine the A/R balance from the Cash Collections budget rather than the Sales Budget. See the March 31 balance sheet detail of
Accounts Receivable
and follow that.

4. Do your best and if the balance sheet does not reconcile don’t begin to change everything around, it’s better to turn it in as you have it rather than manipulate things just to balance. I give points on everything you supply to me, don’t just quit.

 

 

 

Sales Budget

Flik Company

Sales Budget

–

2006

April

June

Quik

–

April

June

May

April-June Total

Budgeted units

Price per unit

Total credit sales estimated

Inventory, COGS Budget

, and Cost of Goods Sold Budget

April May June April-June Total

$ –

$ –

$ –

Purchases $ –

Quik-Flik Company

Inventory,

Purchases

April- July 2006

Source

Cost of goods sold

$ –

Desired ending inventory

for next month

Total Inventory required

Beginning inventory

Operating Budget

Quik-Flik Company

April- July 2006

April May June

Source

$ – $ – $ – $ – $ –

– – – – –

:

$ – $ – $ – $ – $ –

, fixed amount

, fixed amounrt

, fixed amount

, fixed amount

Operating Expense Budget
Jluly	April-July Total
	Variable operating expenses:
Commission expenses
	Miscellaneous expenses
	Total variable operating expenses
	Fixed operating expenses:
	Salary expense
	Rent expense
	Depreciation expense
	Insurance expense
	Total fixed operating expenses
Total operating expenses

Budgeted Income Stmt

Quik-Flik Company

Source

Cost of goods sold

Variable operating expenses:

Miscellaneous expenses
Total variable operating expenses

Fixed operating expenses:

Salary expense
Rent expense
Depreciation expense
Insurance expense

Total fixed operating expenses

Budgeted Income Statement

Four Months Ending July31, 2006

Amount

Sales revenue

Gross profit

Commissions expense

Contribution margin

Operating income

Interest expense

Net income (loss)

Sales Budget

Sales Budget

–

2006

April

June

8 8

Quik-Flik Company

Sales Budget

April May June April-June Total

Budgeted units

.00

Price per unit

$ 8.00 $ 8.00 $ 8.00

Total credit sales estimated

																																																																																																																																										Robin Vanderhoeven
11/30/12
							Quik-Flik Company
						April						June
					May					April-June Total
	Budgeted units				$ 35,000				$ 45,000				$ 60,000
	Price per unit			8
	Total credit sales estimated		$ 280,000	$ 360,000	$	480,000			$ 1,120,000
I found no errors on this sheet
April – June 2006
$ 35,000.00	$ 45,000.00	$ 60,000.00					$	140,000
			$ 8.00
$ 280,000.00	$ 360,000.00	$ 480,000.00	$ 1,120,000.00
https://achieverpapers.com, Please note that I am NOT at all concerned with any formatting errors except for calculation formulas that are incorrect. FYI, the document formatting is my responsibility due to you not having the textbook example provided for you. All of the errors that I have found that I feel were your responsibility are highlighted in flourescent yellow and each budget has a copy of what you provided me and a copy of what I received from you and since edited as my final draft to submit.

Inventory, COGS, Purchses

Quik-Flik Company

, and Cost of Goods Sold Budget

April May June April-June Total

480,000

Purchases

Quik-Flik Company

April May June April-June Total

Cost of goods sold $ 175,000 $ 225,000 $ 300,000

Desired ending inventory

for next month

Total Inventory required

Beginning inventory

Purchases $ 220,000 $ 292,500 $ 210,000 $ 722,500

Inventory,		Purchases
	April- June 2006
			Cost of goods sold		$ 175,000		$ 225,000		$ 300,000		$	700,000
	Desired ending inventory
	for next month	202,500	270,000	180,000	652,500
	Total Inventory required	377,500	495,000	1,352,500
	Beginning inventory	(157,500)	(202,500)	(270,000)	(630,000)
	$ 220,000		$ 292,500		$ 210,000		$ 722,500
Inventory, Purchases, and Cost of Goods Sold Budget
	April- July 2006
			Source
$ 700,000
$ 202,500	$ 270,000	$ 180,000	$ 652,500
$ 377,500	$ 495,000	$ 872,500	$ 1,745,000	There is an incorrect formula in the boxes and totals for the highlighted boxes are incorrect
$ (157,500)	$ (202,500)	$ (270,000)	$ (630,000)

Operating Expense Budget

Quik-Flik Company

Operating Expense Budget

April- June 2006
April May June April-June Total

$ 35,000 $ 45,000 $ 60,000

:

$ 35,000 $ 45,000 $ 60,000 $ 140,000

$ 3,000 $ 3,000

, fixed amount

22,000 22,000

14,000 14,000

, fixed amount

1,200 1,200

, fixed amount

1,500 1,500

$ 41,700 $ 41,700

Quik-Flik Company
Operating Expense Budget
April- July 2006

April May June

Source

Variable operating expenses:

$ 35,000 $ 45,000 $ 60,000 $ 140,000

Salary expense, fixed amount 22,000 22,000 22,000 66,000

Total variable operating expenses:

Fixed operating expenses:

$ 3,000 $ 3,000 $ 3,000 $ 9,000

Utilities expense, fixed amounrt

$ 14,000 $ 14,000

Depreciation expense, fixed amount

$ 1,200 $ 1,200

Insurance expense, fixed amount

$ 1,500 $ 1,500

Total fixed operating expenses

$ 19,700 $ 19,700

Total operating expenses $ 76,700 $ 86,700 $ 101,700 $ 265,100

			Variable operating expenses:
Commission expense	$ 140,000
			Total variable operating expenses
			Fixed operating expenses:
Miscellaneous expense						$ 3,000				$ 9,000
			Salary expense						22,000		66,000
	Utilities expense, fixed amounrt			14,000		42,000
			Insurance expense			1,200		3,600
			Depreciation expense			1,500		4,500
			Total fixed operating expenses			$ 41,700	$	125,100
	Total operating expenses		$ 76,700		$ 86,700		$ 101,700		$ 265,100
April-July Total
Commission expenses
Salary expense is a fixed expense
$ 57,000	$ 67,000	$ 82,000	$ 206,000	Totals are incorrect due to salary expense in wrong category
Miscelleneous expense
		$ 14,000		$ 42,000
		$ 1,200		$ 3,600	Depreciation expense is 1500 per month
		$ 1,500		$ 4,500	Insurance expense is 1200 per month you have it switched with depreciation expense
		$ 19,700	$ 59,100	Due to errors in above calulations it has the totals incorrect also for fixed operating expenses

Budgeted Income Statement

Quik-Flik Company

Budgeted Income Statement

Source

$ 1,120,000 Sales Budget

Cost of goods sold 700,000

Variable operating expenses:

$ 140,000

Total variable operating expenses 140,000

$ 280,000

Fixed operating expenses:

$ 9,000 Operating expense budget

Salary expense

Operating expense budget

42,000 Operating expense budget

Insurance expense 3,600 Operating expense budget
Depreciation expense 4,500 Operating expense budget
Total fixed operating expenses 125,100

Quik-Flik Company
Budgeted Income Statement

Amount Source
Sales revenue $ 1,120,000 Sales Budget

Cost of goods sold $ 700,000 COGS Budget

Gross profit $ 420,000
Variable operating expenses:
Commissions expense $ 140,000 Operating expense budget

Miscellaneous expenses $ 9,000 Operating expense budget

Total variable operating expenses

Contribution margin

Fixed operating expenses:
Salary expense $ 66,000 Operating expense budget

Uility expense $ 42,000 Operating expense budget
Depreciation expense $ 3,600 Operating expense budget

Insurance expense $ 4,500 Operating expense budget

Total fixed operating expenses

Operating income $ 154,900

Interest expense

Given

Net income (loss) $ 151,882

Three Months Ending June 30, 2006

Amount

Sales revenue

COGS Budget

Gross profit

$ 420,000

Commissions expense

Operating expense budget

Contribution margin

Miscellaneous expenses

$ 66,000

Uility expense

Operating income

$ 154,900

Interest expense

(3,018)

Given

Net income (loss)

$ 151,882

Four Months Ending July31, 2006

This is a fixed expense as per instructions

$ 149,000

total is incorrect due to previous error

$ 271,000

contrbution margin incorrect for same reason

Depreciation expense is 4,500

Insurance expense is 3,600

$ 116,100

total fixed operating expenses are incorrect due to the above errors

$ 3,018