Case 6-1 Browning Manufacturing

Michellee Marie B. C kick inz 2004-39460 BM 220 vigilance Accounting 1) BROWNING MANUFACTURING follow T-Accounts tall(prenominal) exchange Accounts Receiv adequate Notes imput fitted-bodied 2,604,000. 00 144,000. 00 2,562,000. 00 49,200. 00 288,840. 00 118,440. 00 78,000. 00 311,760. 00 19,200. 00 264,000. 00 264,000. 00 492,000. 00 2,604,000. 00 552,840. 00 198,000. 00 2,873,760. 00 2,672,400. 00 49,200. 00 201,360. 00 enkindle set down 135,600. 00 38,400. 00 522,000. 00 undefiled Goods 38,400. 00 38,400. 00 257,040. 00 1,806,624. 00 788,400. 00 1,901,952. 00 verificatory Manufacturing Labor 9,000. 00 2,158,992. 00 1,806,624. 0 198,000. 00 36,000. 00 352,368. 00 198,000. 00 52,200. 00 2,986,440. 00 2,542,800. 00 Manufacturing flora and equipment Direct Manufacturing Labor 443,640. 00 2,678,400. 00 492,000. 00 144,000. 00 492,000. 00 pay taxes and insurances 2,822,400. 00 66,720. 00 52,800. 00 Materials 78,000. 00 Accounts Payable 110,520. 00 811,000. 00 144,720. 00 52, 800. 00 788,400. 00 825,000. 00 825,000. 00 91,920. 00 66,000. 00 935,520. 00 811,000. 00 185,760. 00 124,520. 00 788,400. 00 1,076,760. 00 Income Taxes Payable 288,360. 00 range in Process 9,000. 00 9,000. 00 172,200. 00 1,901,952. 00 5,800. 0 merchandising and administrative Expense 811,000. 00 9,000. 00 14,800. 00 522,000. 00 1,129,200. 00 5,800. 00 522,000. 00 2,112,400. 00 1,901,952. 00 210,448. 00 Supplies Depreciation 17,280. 00 61,200. 00 140,400. 00 492,000. 00 66,000. 00 907,200. 00 198,000. 00 83,280. 00 61,200. 00 1,047,600. 00 49,200. 00 22,080. 00 135,600. 00 52,800. 00 Capital clove pink Income Tax Expense 61,200. 00 1,512,000. 00 58,000. 00 140,400. 00 1,512,000. 00 58,000. 00 1,129,200. 00 sales follow of Goods inter revision Power, Heat and Light 2,562,000. 00 1,806,624. 00 135,600. 00 2,562,000. 00 1,806,624. 00 135,600. 00 sales Returns and Allowances sales Discounts kindly Security Taxes 19,200. 00 49,200. 00 49,200. 00 19,200. 00 49,200. 00 49,200. 00 maintained salary 829,560. 00 36,000. 00 68,576. 00 36,000. 00 898,136. 00 862,136. 00 avouchment of puff up-kept Earnings Retained cyberspace, 12/31/09 $829,560. 00 wreak electronic network income 68,576. 00 898,136. 00 less(prenominal) dividends 36,000. 00 Retained earnings, 12/31/10 $862,136. 00 BROWNING MANUFACTURING lodge communicate 2010 Statement of make up of Goods Sold entire Goods Inventory, 1/1/10 $257,040. 00 Work in mathematical operation breed, 1/1/10 $172,200. 00 Materials used 811,000. 00 positivist mill set downsDirect manufacturing labor 492,000. 00 Factory Overhead Indirect manufacturing labor $198,000. 00 Power, catch fire and light 135,600. 00 Depreciation of plant 140,400. 00 sociable security taxes 49,200. 00 Taxes and insurance, factory 52,800. 00 Supplies 61,200. 00 637,200. 00 2,112,400. 00 slight Work in process inscription, 12/31/10 210,448. 00 Cost of goods manufactured 1,901,952. 00 2,158,992. 00 Less Finished goods inventory, 12/31/10 352,368. 00 Cost of goods sold $1,806,624. 00 2) BROWNING MANUFACTURING COMPANY Projected 2010 Income Statement gross sales 2,562,000. 00 Less Sales returns and allowances 19,200. 00Sales discounts allowed 49,200. 00 68,400. 00 Net Sales 2,493,600. 00 Less Cost of Goods Sold 1,806,624. 00 flagrant margin 686,976. 00 Less Selling and administrative put down 522,000. 00 Operating Income 164,976. 00 Less recreate Expense 38,400. 00 Income before federal and state of matter income tax 126,576. 00 Less Estimated income tax expense 58,000. 00 Net Income 68,576. 00 BROWNING MANUFACTURING COMPANY Projected 2010 Balance Sheet Assets Current Assets coin and marketable securities $443,640. 00 Accounts receivable (net of allowance for provisionary accounts) 201,360. 00 Inventories Materials $124,520. 00Work in process 210,448. 00 Finished goods 352,368. 00 Supplies 22,080. 00 709,416. 00 Prepaid taxes and insurance 91,920. 00 fare current assets 1,446,336. 00 Other Assets Manufacturin g plant at constitute 2,822,400. 00 Less stash away depreciation 1,047,600. 00 1,774,800. 00 Total Assets $3,221,136. 00 Liabilities and Shareholders Equity Current liabilities Accounts Payable $288,360. 00 Notes Payable 552,840. 00 Income Taxes referable 5,800. 00 Total current liabilities $847,000. 00 Shareholders law Capital stock 1,512,000. 00 Retained earnings 862,136. 00 Total Liabilities and Shareholders Equity $3,221,136. 00Comparative Statement of Cost of Goods Sold, Projected 2010 vs. 2009 20092010% change Finished Goods Inventory, 1/1/10 218,820. 00 257,040. 00 17. 47% Work in process inventory, 1/1/10 137,760. 00 172,200. 00 25. 00% Materials used 663,120. 00 811,000. 00 22. 30% Direct manufacturing labor 419,040. 00 492,000. 00 17. 41% Indirect manufacturing labor 170,640. 00 198,000. 00 16. 03% Power, heat and light 116,760. 00 135,600. 00 16. 14% Depreciation of plant 126,600. 00 140,400. 00 10. 90% Social security taxes 42,120. 00 49,200. 00 16. 81% Taxes and in surance, factory 46,320. 00 52,800. 00 13. 99% Supplies 56,880. 00 61,200. 00 7. 9% Work in process inventory, 12/31/10 172,200. 00 210,448. 00 22. 21% Finished goods inventory, 12/31/10 257,040. 00 352,368. 00 37. 09% Comparative Income Statement, Projected 2010 vs. 2009 2009 2010 % change Sales 2,295,600. 00 2,562,000. 00 11. 60% Sales returns and allowances 17,640. 00 19,200. 00 8. 84% Sales discounts allowed 43,920. 00 49,200. 00 12. 02% Cost of Goods Sold 1,568,280. 00 1,806,624. 00 15. 20% Selling and administrative expense 437,160. 00 522,000. 00 19. 41% Interest Expense 34,080. 00 38,400. 00 12. 68% Estimated income tax expense 89,520. 00 58,000. 00 -35. 21% Net Income 105,000. 00 68,576. 0 -34. 69% Comparative Balance Sheet, Projected 2010 vs. 2009 2009 2010 % change Cash and marketable securities 118,440. 00 443,640. 00 274. 57% Accounts receivable 311,760. 00 201,360. 00 -35. 41% Materials 110,520. 00 124,520. 00 12. 67% Work in process 172,200. 00 210,448. 00 22. 21% Fin ished goods 257,040. 00 352,368. 00 37. 09% Supplies 17,280. 00 22,080. 00 27. 78% Prepaid taxes and insurance 66,720. 00 91,920. 00 37. 77% Manufacturing plant at cost 2,678,400. 00 2,822,400. 00 5. 38% Accumulated depreciation 907,200. 00 1,047,600. 00 15. 48% Accounts Payable 185,760. 00 288,360. 00 55. 23% Notes Payable 288,840. 0 552,840. 00 91. 40% Income Taxes payable 9,000. 00 5,800. 00 -35. 56% Capital stock 1,512,000. 00 1,512,000. 00 0. 00% Retained earnings 829,560. 00 862,136. 00 3. 93% The comparison shows that in 2010, it is projected that there leave alone be a significant join on by 274. 57% in the telephoners cash and marketable securities. It can in any case be noted that accounts receivables for 2010 is expected to go down by 35. 41%, subject matter the company will work to a greater extent and faster collections of receivables, thus, increase in cash can be expected. On the early(a) hand, notes payable and accounts payable is projected to increase by 91. 40% and 55. 3% respectively, which indicates that the company will not be able to pay its financial obligations in due epoch. Their credit standing as a company will worsen, because the companys expenses will be higher in 2010. They may have faster collections of receivables, however, payables and expenses increases, resulting to the softness of the company to become liquid. Aside from this, inventory overturn is expected to be low, consequence the company will not be able to utilize its resources efficiently. It can as well be attributed to the slight increase in sales which shows that the company is having a hard time disposing / using its resources.Due to these projections, net income is also expected to decrease in 2010. 3) The company will fail to compass its notes payable repayment mark of a closing cash labyrinthine sense of $150,000. 00 after paying off at least(prenominal) $350,000. 00 of the notes payable, because after repaying $350,000, year-end cash balance will decrease to $93,640, which is short of its $150,000 year-end cash balance. In order to fall upon its minimum objective, the company should be able to increase its sales, and lessen the expenses as well as the payables. ) Managements inventory turnover goal will not be achieved in 2010. Inventory turnover can be computed as Cost of Goods Sold / Average Inventory 20091,568,280. 00/ (218,820. 00+257,040. 00)/2 = 6. 59 20101,806,624. 00/ (257,040. 00+352,368. 00)/2 = 5. 93 As shown in the in a higher place computation, inventory turnover in 2010 is pass up than that of 2009. In the budget, inventory turnover goal is not indicated to be achieved. The company should give way its market and demand of the people in order to evaluate how many of the goods should be prepared and ordered by them.They should be aware of the average number of products that they should have and it will be determined found on the demand. They should also strategize by having good marketing and selling t echniques. 5) The budget shows that the company will have a despicable credit trade standing due to its higher payables. This shows that the company is not able to pay its obligations in time, primarily because of its inability to monitor and control their expenses. Eventually, the company will have a hard time borrowing if there will have continuous past dues, thus, operations faculty soon be affected and eventually will not be sustained.