Post on 10-Apr-2015
description
Assets Liabilities + Owner's Equity
Cash Accounts Payable
+ - - +118,440$ 144,000$ 788,400$ 185,760$
264,000$ 78,000$ 825,000$
2,604,000$ 492,000$ 66,000$
198,000$
49,200$ 788,400$ 1,076,760$
135,600$ Notes Payable
522,000$ - +38,400$ 288,840$
788,400$ 264,000$
9,000$
36,000$ -$ 552,840$
Interest on Loans
- +38,400$
2,986,440$ 2,490,600$ 495,840$
Sales
Accounts Receivables - +
+ - 2,562,000$
311,760$ 19,200$
2,562,000$ 49,200$
2,604,000$
2,873,760$ 2,672,400$ 201,360$ COGS
Sales Returns & Allowances - +
+ - 1,806,624$
19,200$
49,200$
Discounts Income Taxes Payable
+ - - +9,000$ 9,000$
58,000$
Selling & Admin Expense 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$ 352,368$ 36,000$ 829,560$
Work in Process Inventory 68,576$
+ -172,200$ 1,901,952$ 36,000$ 898,136$
811,000$ Capital Stock
1,129,200$ - +1,512,000$
2,112,400$ 1,901,952$ (210,448)$
Materials
+ - - +110,520$ 811,000$
825,000$
935,520$ 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$ 52,800$
78,000$
144,720$ 52,800$ 91,920$
Supplies
+ -17,280$ 61,200$
66,000$
83,280$ 61,200$ 22,080$
Plant & Equipment
+ -2,678,400$ 907,200$
144,000$ 140,400$
2,822,400$ 1,047,600$ 1,774,800$
288,360$
552,840$
58,000$
862,136$
58,000$
Finished goods inventory 1/1/98 257,040$
Work in process inventory 1/1/98 172,200$
Materials used 811,000$
Plus: Factory expenses
Direct Manufacturing Labor 492,000$
Factory overhead
Indirect manufacturing labor 198,000$
Power, heat and light 135,600$
Depreciation of plant 140,400$
Social Security Taxes 49,200$
Taxes and insurance, factory 52,800$
Supplies 61,200$ 637,200$
2,112,400$
Less: Work in process inventory 12/31/98 210,448$
Cost of goods manufactured (completed) 1,901,952$
2,158,992$
Less: Finished goods inventory 12/31/98 352,368$
Cost of goods sold 1,806,624$
Browning Manufacturing Company
Statement of Cost of Goods Sold (Schedule 1)For the Year ended December 31, 1998
COST OF SALES AND INVENTORIESGROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD
Sales 2,562,000$
Less: Sales returns and allowances 19,200$
Sales discounts allowed 49,200$ 68,400$
Net Sales 2,493,600$
Less: Cost of goods sold (Schedule 1) 1,806,624$
Gross Margin 686,976$
Less: Selling and administrative expense 522,000$
Operating Income 164,976$
Less: Interest Expense 38,400$
Income before federal and state income tax 126,576$
Less: Estimated income tax expense 58,000$
Net Income 68,576$
Browning Manufacturing CompanyProjected Income Statement
For the Period Ended 12/31/1998
COST OF SALES AND INVENTORIES
GROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD
Assets Current assets:
Cash and marketable securities 495,840$
Account receivable (net of allowance for doubtful accounts) 201,360$
Inventories:
Materials 124,520$
Less: Cost of goods sold (schedule 1) 210,448$
Finished Goods 352,368$
Supplies 22,080$ 709,416$
Prepaid taxes and insurance 91,920$
Total current assets 1,498,536$
Other assets:
Manufacturing plant at cost 2,822,400$
Less: Accumulated depreciation 1,047,600$ 1,774,800$
Total Assets 3,273,336$
Liabilities and Shareholders' EquityCurrent liabilities:
Accounts payable 288,360$
Notes payable 552,840$
Income taxes payable 58,000$
Total current liabilities 899,200$
Shareholders' equity:
Capital stock 1,512,000$
Retained earnings 862,136$ 2,374,136$
Total Liabilities and Shareholders' Equity 3,273,336$
Browning Manufacturing Company
Projected Balance Sheet
For the Period Ended December 31, 1998
COST OF SALES AND INVENTORIES
GROUP 1: JENICE JOY SUMAWAY AND MIKE AGENCIA
BM 220 --- PROF. TRINIDAD
NET SALES $2,493,600.00COST OF GOODS SOLD
MATERIALS COST:
Materials Inventory, January 1 110,520.00$
Purchases 825,000.00
Plus: Freight-in -
Total Purchases 825,000.00
Materials Available 935,520.00
Less: Materials Inventory, Dec. 31 (124,520.00)
COST OF MATERIALS USED 811,000.00
DIRECT LABOR COST 492,000.00 MANUFACTURING OVERHEAD COST:
Indirect Labor 198,000.00
Factory Heat, Light and Power 135,600.00
Factory Supplies Used 61,200.00
Insurance & Taxes, Factory 52,800.00
Social Security Taxes 49,200.00
Depreciation - Plant & Equipment 140,400.00
TOTAL MANUFACTURING OVERHEAD COST 637,200.00
TOTAL MANUFACTURING COST 1,940,200.00
ADD: Work in Process Inventory, Jan 1 172,200.00
TOTAL: 2,112,400.00
LESS: Work in Process Inventory, Dec. 31 (210,448.00)
COST OF GOODS MANUFACTURED 1,901,952.00
ADD: Finished Goods Inventory, Jan. 1 257,040.00
COST OF GOODS AVAILABLE FOR SALE 2,158,992.00
LESS: Finished Goods Inventory, Dec. 31 (352,368.00)
LESS: COST OF GOODS SOLD (1,806,624.00)
Gross Margin 686,976.00
Less: Selling & Administrative Expense (522,000.00)
Operating Profit 164,976.00
Interest Expense (38,400.00)
Income before Income Taxes 126,576.00
Provision for Income Tax (58,000.00) NET INCOME 68,576.00$
Browning Manufacturing CompanyProjected Income Statement
For the Period Ending December 31, 1988(Schedule 1)
COST OF SALES AND INVENTORIESGROUP1: JENICE JOY SUMAWAY and MIKE AGENCIA
BM 220 --- PROF. TRINIDAD
Less: Sales returns and allowances 19,200.00
Sales discounts allowed 49,200.00 68,400.00
Net Sales 2,425,200.00
Less: Cost of goods sold (per schedule) 1,806,624.00
Gross Margin 618,576.00
Less: Selling and administrative expense 522,000.00
Operating Income 96,576.00
Less: Interest Expense 38,400.00
Income before federal and state income tax 58,176.00
Less: Estimated income tax expense 58,000.00
Net Income 176.00
COST OF SALES AND INVENTORIESGROUP1: 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%
Inventories:
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%
1997 1998 POS/NEG
Liabilities
Account Payable 185,760$ 288,360$ 55%
Notes Payable 288,840$ 552,840$ 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 % INC/DEC
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%
Factory Overhead
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%
Cost of Goods Sold 1,568,280$ 1,806,624$ 15%
2. Exhibit 3 - Projected Income Statement, Projected 1997 vs Projected 1998
1997 1998 % POS/NEG
Sales 2,295,600$ 2,562,000$ 12%
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%
Income before federal and state income tax 194,520$ 126,576$ -35%
Estimated income tax expense 89,520$ 58,000$ 54%
Net Income 105,000$ 68,576$ -35%
COST OF SALES AND INVENTORIES 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