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    ACC 206 WEEK 4 ASSIGNMENT 1

    acc 206 week 4 . Comprehensive budgeting
    The balance sheet of Watson Company as of December 31, 20X1, follows.
    WATSON COMPANY 
    Balance Sheet 
    December 31, 12X1 
    Assets 		
    Cash 		$4,595 
    Accounts receivable 		10,000
    Finished goods (575 units x $7.00) 		4,025
    Direct materials (2,760 units x $0.50) 		1,380
    Plant & equipment 	$50,000 	
    Less: Accumulated depreciation 	10,000	40,000
    Total assets 		$60,000 
    Liabilities & Stockholders' Equity 		
    Accounts payable to suppliers 		$14,000 
    Common stock 	$25,000 	
    Retained earnings 	21,000	46,000
    Total liabilities &. stockholders' equity 		$60,000 
    
    The following information has been extracted from the firm's accounting records:
    1.	All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first five months of 20X2 are: January, 1,500 units,- February, 1,600 units; March, 1,800 units; April, 2,000 units; May, 2,100 units.
    2.	Management wants to maintain the finished goods inventory at 30% of the following month's sales.
    3.	Watson uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next six months. Management wants to maintain the ending direct materials inventory at 60% of the following month's production needs.
    4.	Seventy percent of all purchases are paid in the month of purchase; the remaining 30% are paid in the subsequent month.
    5.	Watson's product requires 30 minutes of direct labor time. Each hour of direct labor costs $7.
    
    Instructions:
    a.	Rounding computations to the nearest dollar, prepare the following for January through March:
    1) Sales budget
    2) Schedule of cash collections
    3) Production budget
    4) Direct material purchases budget
    5) Schedule of cash disbursements for material purchases
    6) Direct labor budget
    1) Accounts Receivable
    b.	Determine the balances in the following accounts as of March 31:
    3) Accounts Payable
    2) Direct Materials
    

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  1. ACC 206 WEEK 4 ASSIGNMENT 1ACC 206 WEEK 4 ASSIGNMENT 1ACC 206 WEEK 4 ASSIGNMENT 1ACC 206 WEEK 4 ASSIGNMENT 1ACC 206 WEEK 4 ASSIGNMENT 1ACC 206 WEEK 4 ASSIGNMENT 1
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