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There are two (2) questions.
Question 1: Show all workings. Could be done in word or excel format.
Question 2: Answer should be in word document format.
QUESTION 1
Bill Thomas, Bates & Hill’s controller, has received all the budgets prepared by the various operating units and is ready to compile the pro-forma financial statements for the first quarter. The company’s balance sheet as of December 31 is as follows:
Cash…………………………………………….. $ 36,000
Accounts Receivable (net) ……………………… 35,100
Finished Goods Inventory ………………………29,400
Raw Materials Inventory ……………………… 4,536
Property, Plant & Equipment ………………… 180,000
Accumulated Depreciation …………………… (45,000)
Total Assets …………………………………… $240,036
Accounts Payable …………………………….. $10,800
Income Tax Payable ………………………….. 45,156
Common Stock ……………………………….. 60,000
Retained Earnings ……………………………. 124,080
Total Liabilities & Owners Equity…………… $240,036
Additional Information:
The company expects a 18% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.
The company expects a 30% income tax rate, and all quarterly taxes are paid in the first month of the following quarter.
Required
a. Prepare Bates & Hill’s pro-forma income statement for the first quarter.
b. Prepare Bates & Hill’s pro-forma balance sheet as of March 31.
……………………………………………………………………………………………….
QUESTION 2
Complete essay in Word document in APA format.
Essay Question 1
Complete the essay questions in one Word document and submit to the Dropbox:
Management by exception focuses only on those variances management considers important. List three factors that managers use in deciding whether or not to investigate a variance and give an example of each.
Essay Question 2
Managers use budgeting to control and evaluate their operations. Two types of budgets that were discussed: the static budget and the flexible budget. How do the two budgets differ and explain how the flexible budget is used in evaluating performance.
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