Page of 3 ZooM The Grilton Tire Company manufactures racing

Page of 3 ZooM The Grilton Tire Company manufactures racing tires for bicycles. Grilton sells tires for $50 each. Grilton is planning for next year by developing a master budget by quarters. Grilton\'s balance sheet for December 31, 2017 follows: GRILTON TIRE COMPANY Balance Sheet December 31, 2017 Assets Current Assets Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets 39,000 40,000 2,400 8,700 90,100 Property, Plant and Equipment Equipment Less: Accumulated Depreciation 177,000 42,000 135,000 $225,100 Total Assets Liabilities Current Liabilities: Accounts Payable 8,000 Stockholder\'s Equ

Solution

1.

2.

3.

4.

5.

6.

7.

8.  

9.

The budget provides an overview of the performance of the company, and enables the company to plan for the operations for the budget period by giving the estimated cash position so as to enable the company to plan for raising the required resources.

The budget prepared above shows that there is adequate cash flow fo the year 2018 in total. however, there is a shortfall of cash in quarter 1, wherein the company is planning capital expenditure. therefore there is a need for a shortterm borrowing of $26,000 inquarter1 which will be repaid by the end of the year.

Sales Budget
	Q1	Q2	Q3	Q4	Total
Unit sales	1500	1700	1900	2100	7200
Unit Selling Price	50	50	50	50	50
Budgeted sales -Dollars	75000	85000	95000	105000	360000
Cash sales	22500	25500	28500	31500	108000
Credit Sales	52500	59500	66500	73500	252000