Short Term Budgeting continued…

Sample Problem No. 4: Budgeted Income Statement

Consider the data and solutions in the previous sample problems. The standard costs of AJ Corporation are summarized below:
Units Rate Cost per unit
Direct Material 3 lbs. P 1.20 per lb. P 3.60
Direct Labor 0.25 hr. 0.20 per hr. 0.05
Variable Factory Overhead 0.25 hr. 5.00 per hr. 1.25
Foxed Factory Overhead 0.25 hr. 4.00 per hr. 1
Total P 5.90

The standard costs are the same from year 2019 to 2020. The work-in-process inventories are estimated at 10% of the current
production put into process. The work-in-process on December 31, 2019 is determined at P75,000.00.

Operating Expenses are budgeted at 20% of sales in a quarter. Non-cash operating expenses including accruals and prepayments are
estimated at 20% of sales. Other income from operations are projected at 5% of sales. The accrued and prepaid items are as follows:
2020
Q4, 2019
Q1 Q2 Q3 Q4
Accrued Expenses P 12,000.00 P 15,000.00 P 22,000.00 P 14,000.00 P 15,000.00
Prepaid Expenses 3,000.00 6,000.00 6,500.00 7,400.00 8,800.00
Accrued Income 4,400.00 900.00 3,500.00 7,900.00 8,600.00
Prepaid Income 2,100.00 3,300.00 4,400.00 9,700.00 8,200.00
The income tax rate is 40%.
Required:
a. Budgeted cost of goods manufactured and sold.
b. Budgeted income statement.
c. Budgeted cash payments to operating expenses.
d. Budgeted cash receipts from other revenues.

Financial Budget
Sample Problem No. 51: Cash Budget and Budgeted Cash Flows
Consider all the data and solutions in previous samples. Other cash transactions are:

Non-current assets are to be acquired in the second and third quarters of 2020 in the amounts of P200,000.00 and P145,000.00,
respectively. Some old non-current assets are to be sold at its book value for P174,000.00 in the third quarter.

Dividends are to be paid in February for P400,000.00 and July for P250,000.00.

The minimum cash balance is set at P400,000.00. In case of deficit, the corporation can avail a credit line in multiples of P25,000.00
from a financing institution at a rate of 14% per annum. Interest is paid quarterly based on the outstanding balance at the beginning of
the quarter. Payments to borrowings in multiples of P25,000.00 are made whenever cash is available determined at the beginning of the
quarter. The cash balance of January 1, 2020 is expected to equal the minimum cash balance.

Required:
a. Cash Budget.
b. Budgeted statement of cash flows.