Bob's Bicycles - Master Budget 2010

Porter's Problems Co.Basic Information

For Year Ended December 31, 2007

Budget - Data Input SheetSales Information:Sales Growth Assumptions: 2% per quarter for the basic model (mature life stage)

5% per quarter for the deluxe model (growth stage)2009

Sales in units: 2010 2011 Ending

Q1 Q2 Q3 Q4 Year total Q1 Q2 Inventory

Basic 4,000 4,080 4,162 4,245 16,486 4,330 4,416 807

Deluxe 2,000 2,100 2,205 2,315 8,620 2,431 2,553 98

Collection Information:Credit Policy: Cash Sales Credit Sale In same In next In third In fourth Bad

30% 70% Quarter Quarter Quarter Quarter Debt

Collection Policy 60% 30% 9% 0% 1%

Collections from prior year:

Prior Actual Actual Budgeted Receipts in Current YearYear Sales Collected Q1 Q2 Q3 Q4 YearQ3 $779,800 $725,214 $49,127 $0 $0 $0 $49,127 Q4 $901,350 $648,900 $189,284 $56,785 $0 $0 $246,069

$238,411 $56,785 $0 $0 $295,196

Manufacturing Information:Direct Materials Ending Inventory 15% of next quarter's production needs

Basic Bicycle Ending Inventory 20% of next quarter's sales needsDeluxe Bicycle Ending Inventory 5% of next quarter's sales needs

Direct Material Information: Direct Labor Information:2009 Hours of DL per Normal bike:

Units Cost per Cost per Ending Hours of DL per Specialty bike:Basic Bike Needed Unit Bike Inventory Wages per Hour:Steel 2 $15.00 $30.00 1295Rubber Handles 2 $2.00 $4.00 1286 Manufacturing OH Information:Seat 1 $4.00 $4.00 640 Variable OH Allocation per DL hr:Chain 1 $6.00 $6.00 652Tires 2 $10.00 $20.00 1275 Fixed OH per year:Gear Shift 1 $8.00 $8.00 609 Amount of Fixed OH from Depr:Brake Unit 1 $6.00 $6.00 658

Standard Cost:

Deluxe Bike Basic Bike 116Steel 3.5 $15.00 $52.50 * Deluxe Bike 229Special Handles 2 $5.00 $10.00 32

Specialty Seat 1 $14.00 $14.00 26 A/P Purchase Payment Policy



Chain 1 $6.00 $6.00 * Payments made in current QTires 2 $10.00 $20.00 * Payments made in next QExpanded Shift 1 $25.00 $25.00 34Brake Unit 1 $6.00 $6.00 *

Prior year purchasesActual Actual

* inventory for standard items is used for both bikes Total Purch Paidbut only shown here for the Basic Bike $452,650 $338,700



Selling and Administrative Expense Information:

Variable S&A for Normal bikes: $15 Variable S&A for Specialty bikes: $20

Selling

Price Fixed S&A Expenses per year:

$150

$350 Advertising $125,000

Executive Salaries $65,000

Property Taxes $7,800Office Rent $12,000

Sales Cleaning Fees $6,000

Inventory R&D Costs $18,500

Credit/Collections

Purchasing Cash Flow and Investment Information:Accounting RequirementsProduction

Minimum Cash Balance: $30,000 Dividends

Required Dividend Payment each Qtr: $10,000

Planned Expansion (Purchase of Equipment)Budgeted Purchases in Current Year

Q1 Q2 Q3 Q4 Year$50,000 $75,000 $40,000 $22,000 $187,000

Debt Information:25 Amount owed on bond $997,600

$14 Interest rate on bond 5%

Line of Credit Max: $2,000,000$1.75 Interest Rate on LofC: 12%

$250,000 Common Stock information:25%

Shares of stock outstanding: 100,000 at $10 per share

Miscellaneous Information:

The company's tax rate is: 30%

A/P Purchase Payment Policy Last year the company paid taxes of: $108,500



75.0% Amount of last year's tax to pay this year: 105%25.0% Total tax to prepay this year: $113,925

Payment due each quarter: $28,481

Budgeted Payments in Current YearQ1 Q2 Q3 Q4 Year

$113,950 $0 $0 $0 $113,950



Bob's BicyclesBalance Sheet

As of December 31, 2009

Assets

Current Assets

Cash $30,176

Accounts Receivable $295,196

Direct Materials Inventory $51,413 Finished Good Inventory $116,060

Total Current Assets $492,845

Property, Plant, and Equipment

Building $1,500,000 Equipment $1,500,000 Accumulated Depr - Equipment ($875,000)

Total PPE $2,125,000

Total Assets $2,617,845

Liabilities and Stock Holder's Equity

LiabilitiesAccounts Payable $113,950 Bonds Payables $997,600

Total Liabilities $1,111,550

Stockholder's EquityCommon Stock (100,000 shares outs $1,000,000 Retained Earnings $506,295

Total Stockholder's Equity $1,506,295

Total Liabilities and Stockholder's Equity $2,617,845



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Porter's Problems Co.Sales and Collections Budget

For the Year Ended December 31, 2007

Sales Budget

2010 2011Q1 Q2 Q3 Q4 Year Q1

Basic Bicycle $ 600,000 $ 612,000 $ 624,240 $ 636,725 $2,472,965 $ 649,459 Deluxe Bicycle $ 700,000 $ 735,000 $ 771,750 $ 810,338 $3,017,088 $ 850,854 Total Sales Revenue $1,300,000 $1,347,000 $1,395,990 $1,447,062 $5,490,052 $ 1,500,314

Schedule of Cash CollectionsQuarter Collected during

Q1 Q2 Q3 Q4 Bad Debt YearCollections from 2009 $238,411 $56,785 $0 $0 $295,196 Q1 $936,000 $273,000 $81,900 $0 $9,100 $1,290,900 Q2 $969,840 $282,870 $84,861 $9,429 $1,337,571 Q3 $1,005,113 $293,158 $9,772 $1,298,271 Q4 $1,041,885 $10,129 $1,041,885

$1,174,411 $1,299,625 $1,369,883 $1,419,904 $38,430 $5,263,823

Porter's Problems Co.Sales and Collections Budget


2011Q2

$ 662,448 $ 893,397 $ 1,555,846

Schedule of Cash Collections

Remaining A/R Check figure

$0 $1,300,000 $0 $1,347,000

$87,947 $1,395,990 $395,048 $1,447,062 $482,995 $5,490,052

Porter's Problems Co.Production Budget


Production Budget

2010 2011Q1 Q2 Q3 Q4 Year Q1 Q2

Basic Bicycles:Budgeted Sales 4,000 4,080 4,162 4,245 16,486 4,330 4,416Desired Ending Inventory 816 832 849 866 866 883

Total Units Needed 4,816 4,912 5,011 5,111 17,352 5,213Less: Beginning Inventory 807 816 832 849 807 866

Required Normal Bike Production 4,009 4,096 4,178 4,262 16,545 4,347

Deluxe Bicycles:Budgeted Sales 2,000 2,100 2,205 2,315 8,620 2,431 2,553Desired Ending Inventory 105 110 116 122 122 128

Total Units Needed 2,105 2,210 2,321 2,437 8,742 2,559Less: Beginning Inventory 98 105 110 116 98 122

Required Normal Bike Production 2,007 2,105 2,211 2,321 8,644 2,437

Porter's Problems Co.Direct Materials and Cash Disbursements for Materials Budgets

For Year Ended Dec. 31, 2007

Direct Materials Budget

2010 2011Q1 Q2 Q3 Q4 Year Q1

Required ProductionNormal 4,009 4,096 4,178 4,262 16,545 4,347Deluxe 2,007 2,105 2,211 2,321 8,644 2,437

Direct Materials NeededBasic

Steel 8,018 8,193 8,356 8,524 33,091 8,694Rubber Handles 8,018 8,193 8,356 8,524 33,091 8,694Seat 4,009 4,096 4,178 4,262 16,545 4,347Chain 4,009 4,096 4,178 4,262 16,545 4,347Tires 8,018 8,193 8,356 8,524 33,091 8,694Gear Shift 4,009 4,096 4,178 4,262 16,545 4,347Brake Unit 4,009 4,096 4,178 4,262 16,545 4,347

DeluxeSteel 7,025 7,368 7,737 8,124 30,253 8,530Special Handles 4,014 4,211 4,421 4,642 17,288 4,874Specialty Seat 2,007 2,105 2,211 2,321 8,644 2,437Chain 2,007 2,105 2,211 2,321 8,644 2,437Tires 4,014 4,211 4,421 4,642 17,288 4,874Expanded Shift 2,007 2,105 2,211 2,321 8,644 2,437Brake Unit 2,007 2,105 2,211 2,321 8,644 2,437

TotalsSteel 15,043 15,561 16,093 16,647 63,344 17,224Rubber Handles 8,018 8,193 8,356 8,524 33,091 8,694Seat 4,009 4,096 4,178 4,262 16,545 4,347Chain 6,016 6,202 6,389 6,583 25,189 6,784Tires 12,032 12,403 12,778 13,166 50,378 13,568Gear Shift 4,009 4,096 4,178 4,262 16,545 4,347Brake Unit 6,016 6,202 6,389 6,583 25,189 6,784Special Handles 4,014 4,211 4,421 4,642 17,288 4,874Specialty Seat 2,007 2,105 2,211 2,321 8,644 2,437Expanded Shift 2,007 2,105 2,211 2,321 8,644 2,437

Desired Ending InventorySteel 2,334 2,414 2,497 2,584 2,584Rubber Handles 1,229 1,253 1,279 1,304 1,304Seat 614 627 639 652 652Chain 930 958 987 1,018 1,018Tires 1,860 1,917 1,975 2,035 2,035Gear Shift 614 627 639 652 652Brake Unit 930 958 987 1,018 1,018Special Handles 632 663 696 731 731Specialty Seat 316 332 348 366 366Expanded Shift 316 332 348 366 366



Total NeedsSteel 17,377 17,975 18,590 19,231 65,928Rubber Handles 9,247 9,446 9,635 9,828 34,395Seat 4,623 4,723 4,818 4,914 17,197Chain 6,946 7,160 7,376 7,600 26,207Tires 13,892 14,320 14,752 15,201 52,414Gear Shift 4,623 4,723 4,818 4,914 17,197Brake Unit 6,946 7,160 7,376 7,600 26,207Special Handles 4,646 4,874 5,117 5,373 18,019Specialty Seat 2,323 2,437 2,559 2,687 9,009Expanded Shift 2,323 2,437 2,559 2,687 9,009

Less: Beginning InventorySteel (1,295) (2,334) (2,414) (2,497) (1,295)Rubber Handles (1,286) (1,229) (1,253) (1,279) (1,286)Seat (640) (614) (627) (639) (640)Chain (652) (930) (958) (987) (652)Tires (1,275) (1,860) (1,917) (1,975) (1,275)Gear Shift (609) (614) (627) (639) (609)Brake Unit (658) (930) (958) (987) (658)Special Handles (32) (632) (663) (696) (32)Specialty Seat (26) (316) (332) (348) (26)Expanded Shift (34) (316) (332) (348) (34)

Direct Materials to be PurchasedSteel 16,082 15,641 16,176 16,734 64,633Rubber Handles 7,961 8,217 8,382 8,549 33,109Seat 3,983 4,109 4,191 4,275 16,557Chain 6,294 6,230 6,418 6,613 25,555Tires 12,617 12,459 12,836 13,226 51,139Gear Shift 4,014 4,109 4,191 4,275 16,588Brake Unit 6,288 6,230 6,418 6,613 25,549Special Handles 4,614 4,242 4,454 4,677 17,987Specialty Seat 2,297 2,121 2,227 2,338 8,983Expanded Shift 2,289 2,121 2,227 2,338 8,975

Cost per unit of Direct MaterialsSteel $15 $15 $15 $15 $15 Rubber Handles $2 $2 $2 $2 $2 Seat $4 $4 $4 $4 $4 Chain $6 $6 $6 $6 $6 Tires $10 $10 $10 $10 $10 Gear Shift $8 $8 $8 $8 $8 Brake Unit $6 $6 $6 $6 $6 Special Handles $5 $5 $5 $5 $5 Specialty Seat $14 $14 $14 $14 $14 Expanded Shift $25 $25 $25 $25 $25

Cost of Direct Materials to be purchased



Steel $241,225 $234,613 $242,646 $251,006 $969,490Rubber Handles $15,922 $16,434 $16,763 $17,098 $66,218Seat $15,934 $16,434 $16,763 $17,098 $66,230Chain $37,765 $37,378 $38,507 $39,678 $153,329Tires $126,175 $124,593 $128,357 $132,261 $511,386Gear Shift $32,116 $32,869 $33,526 $34,197 $132,707Brake Unit $37,729 $37,378 $38,507 $39,678 $153,293Special Handles $23,068 $21,210 $22,271 $23,384 $89,934Specialty Seat $32,155 $29,695 $31,179 $32,738 $125,767Expanded Shift $57,220 $53,026 $55,677 $58,461 $224,384

Total Cost $619,308 $603,630 $624,198 $645,601 $2,492,737

Schedule of Cash Payments

QuarterQ1 Q2 Q3 Q4 Year

Accounts Payable, Beginning $113,950 $0 $0 $0 $113,950 Q1 $464,481 $154,827 $0 $0 $619,308 Q2 $0 $452,723 $150,908 $0 $603,630 Q3 $0 $0 $468,148 $156,049 $624,198 Q4 $0 $0 $0 $484,201 $484,201

Total Cash Paid for Mat$578,431 $607,550 $619,056 $640,250 $2,445,287

Porter's Problems Co.Direct Labor Budget


Direct Labor Budget

2010Q1 Q2 Q3 Q4 Year

Required ProductionBasic 4,009 4,096 4,178 4,262 16,545Deluxe 2,007 2,105 2,211 2,321 8,644

DL hours per bicycleBasic 2 2 2 2 2Deluxe 5 5 5 5 5

Total DL hours neededBasic 8,018 8,193 8,356 8,524 33,091Deluxe 10,035 10,526 11,053 11,605 43,219

Total DL hours needed 18,053 18,719 19,409 20,129 76,310

Cost per DL Hour $14 $14 $14 $14 $14 Total DL Cost $252,742 $262,064 $271,727 $281,803 $1,068,337

Porter's Problems Co.Manufacturing Overhead Budget


Manufacturing Overhead Budget


Budgeted DL hours 18,053 18,719 19,409 20,129 76,310Variable OH rate $1.75 $1.75 $1.75 $1.75 $1.75

Total Variable OH $31,593 $32,758 $33,966 $35,225 $133,542 Fixed OH $62,500 $62,500 $62,500 $62,500 $250,000

Total OH $94,093 $95,258 $96,466 $97,725 $383,542

Total Manufacturing OH $383,542 Budgeted DL Hours 76,310

Predetermined OH for 2007 $ 5.03

Schedule of Cash Disbursements for Overhead2010

Q1 Q2 Q3 Q4 YearTotal OH $94,093 $95,258 $96,466 $97,725 $383,542 Less: Depreciation and Amortization $15,625 $15,625 $15,625 $15,625 $62,500

Cash Disbursements for OH $78,468 $79,633 $80,841 $82,100 $321,042

Porter's Problems Co.Ending Inventory Budget


Ending Finished Goods Inventory Budget

Item Quantity Cost TotalProduction Cost per Basic BikeDM Steel 2 units $15 each $30

Rubber Handle 2 set $2 each $4Seat 1 unit $4 each $4Chain 1 unit $6 each $6Tires 2 unit $10 each $20Gear Shift 1 unit $8 each $8Brake Unit 1 unit $6 each $6

Total DM $78DL 2 hours $14 per hour $28OH 2 hours $5.03 per DL hour $10

Unit Production Cost $116 Ending finished goods inventory in units - Basic Bikes 866 Ending finished goods inventory in dollars - Basic Bikes $ 100,495

Production Cost per Deluxe BikeDM Steel 3.5 units $15 each $53

Special Handle 2 set $5 each $10Specialty Seat 1 unit $14 each $14Chain 1 unit $6 each $6Tires 2 unit $10 each $20Expanded Shift 1 unit $25 each $25Brake Unit 1 unit $6 each $6

Total DM $134DL 5 hours $14 per hour $70OH 5 hours $5.03 per DL hour $25

Unit Production Cost $229 Ending finished goods inventory in units - Deluxe Bikes 122 Ending finished goods inventory in dollars - Deluxe Bikes $ 27,790

Total Ending Finished Goods Inventory $ 128,285

Porter's Problems Co.Selling and Administrative Expense Budget


Selling and Administrative Budget


Budgeted sales (by bicycle)Basic 4,000 4,080 4,162 4,245 16,486Deluxe 2,000 2,100 2,205 2,315 8,620

Variable S&A ExpenseBasic $15 $15 $15 $15 $15 Deluxe $20 $20 $20 $20 $20

Total Variable S&ABasic $60,000 $61,200 $62,424 $63,672 $247,296 Deluxe $40,000 $42,000 $44,100 $46,305 $172,405

Total Variable S&A $100,000 $103,200 $106,524 $109,977 $419,701

Budgeted Fixed S&A ExpensesAdvertising $31,250 $31,250 $31,250 $31,250 $125,000Executive Salaries $16,250 $16,250 $16,250 $16,250 $65,000Property Taxes $1,950 $1,950 $1,950 $1,950 $7,800Office Rent $3,000 $3,000 $3,000 $3,000 $12,000Cleaning Fees $1,500 $1,500 $1,500 $1,500 $6,000R&D Costs $4,625 $4,625 $4,625 $4,625 $18,500

Total Budgeted Fixed S&A Expense $58,575 $58,575 $58,575 $58,575 $234,300

Total S&A Expense $158,575 $161,775 $165,099 $168,552 $654,001

Porter's Problems Co.Cash Budget


Cash Budget

2010Q1 Q2 Q3 Q4

Cash Balance, Beginning $30,176 $35,420 $98,071 $240,281 Add Receipts:

Cash Collected from Customers $1,174,411 $1,299,625 $1,369,883 $1,419,904 Total Cash Available $1,204,587 $1,335,045 $1,467,954 $1,660,184

Less: Manufacturing OutflowsDirect Materials ($578,431) ($607,550) ($619,056) ($640,250)Direct Labor ($252,742) ($262,064) ($271,727) ($281,803)Variable OH ($31,593) ($32,758) ($33,966) ($35,225)Fixed OH ($46,875) ($46,875) ($46,875) ($46,875)

Total Manufacturing Outflows ($909,641) ($949,247) ($971,623) ($1,004,154)

Less: Selling & Admin OutflowsVariable Selling and Admin ($100,000) ($103,200) ($106,524) ($109,977)Fixed Selling and Admin ($58,575) ($58,575) ($58,575) ($58,575)

Total Selling and Admin ($158,575) ($161,775) ($165,099) ($168,552)

Total Cash Outflows from Operations ($1,068,216) ($1,111,022) ### ($1,172,707)Cash Available from Normal Operations $136,371 $224,023 $331,232 $487,478

Less: InvestmentsEquipment Purchases ($50,000) ($75,000) ($40,000) ($22,000)

Cash Available after Investments $86,371 $149,023 $291,232 $465,478

Miscellaneous Cash FlowsIncome Taxes ($28,481) ($28,481) ($28,481) ($28,481)Bond Interest Payments ($12,470) ($12,470) ($12,470) ($12,470)Sale of Stock, issue of other debt, etc. $0 $0 $0 $0 Dividends ($10,000) ($10,000) ($10,000) ($10,000)

Total Miscellaneous Cash Flows ($50,951) ($50,951) ($50,951) ($50,951)Total Cash before Line of Credit $35,420 $98,071 $240,281 $414,527

Line of CreditBeginning Balance (not a Cash Flow) $0 $0 $0 $0 Interest (not a Cash Flow) $0 $0 $0 $0

Loans $0 $0 $0 $0 Repayments

Principal $0 $0 $0 $0 Interest $0 $0 $0 $0

Ending Cash Balance $35,420 $98,071 $240,281 $414,527

Porter's Problems Co.Cash Budget


Cash Budget

2010Year$30,176

$5,263,823 $5,293,999

($2,445,287)($1,068,337)

($133,542)($187,500)

($3,834,665)

($419,701)($234,300)($654,001)

($4,488,667)$805,332

($187,000)$618,332

($113,925)($49,880)

$0 ($40,000)

($203,805)$414,527

$0

$0

$0 $0

$414,527

CBE:You can use the beginning balance here too.

I leave it blank to remind myself that I am not going to use it in the financial statements

H38

CBE: You can use the beginning balance here too. I leave it blank to remind myself that I am not going to use it in the financial statements

Bob's BicyclesPro Forma Income Statement

For Year ended December 31, 2010

Sales $5,490,052 Cost of Goods Sold ($3,884,140)

Gross Profit $1,605,912

Less Selling and Administrative ($654,001)Bad Debt Expense ($38,430)Income before Interest and Taxes $913,480

Interest Expense ($49,880)Income before Taxes $863,600

Income Taxes Expense ($259,080)Net Income $604,520

EPS $6.05

Income Statement Calculations

COGS

Beginning FG inventory $116,060 DM

Beginning $51,413 Plus: Purchased $2,492,737 Less: Ending ($99,663)

Total DM $2,444,487 DL $1,068,337 OH (Manufacturing) $383,542

Total Cost of Goods Available for Sale $4,012,426 Less: Ending Inventory $128,285

COGS $3,884,140

Ending Inventory

Steel 2,584 $15 $38,754 Rubber Handles 1,304 $2 $2,608 Seat 652 $4 $2,608 Chain 1,018 $6 $6,106 Tires 2,035 $10 $20,352 Gear Shift 652 $8 $5,216 Brake Unit 1,018 $6 $6,106 Special Handles 731 $5 $3,656 Specialty Seat 366 $14 $5,118 Expanded Shift 366 $25 $9,139

$99,663

Interest ExpenseLine of Credit interest accrued $0 Bond interest accrued $49,880

Total Interest Accrued $49,880

Bob's BicyclesPro Forma Balance Sheet

As of December 31, 2010

Assets

Current AssetsCash $414,527 (a.)Accounts Receivable, net $482,995 (b.)Raw Materials Inventory $99,663 (c.)Finished Good Inventory $128,285 (d.)

Total Current Assets $1,125,470

Property, Plant, and EquipmentBuilding $1,500,000 (e.)Equipment $1,687,000 (g.)Accumulated Depr - Building and Equipment ($937,500) (h.)

Total PPE $2,249,500

Total Assets $3,374,970

Liabilities and Stock Holder's Equity

Current LiabilitiesAccounts Payable $161,400 (i.)Interest Payable $0 (j.)Income Tax Payable $145,155 (k.)

Total Current Liabilities $306,555

Long-term LiabilitiesBonds Payables $997,600 (l.)Loan Payable $0 (m.)

Total Long-term Liabilities $997,600 Total Liabilities $1,304,155

Stockholder's EquityCommon Stock (100,000 shares outstanding) $1,000,000 (n.)Retained Earnings $1,070,815 (o.)

Total Stockholder's Equity $2,070,815

Total Liabilities and Stockholder's Equity $3,374,970 $0

Notes to the Balance Sheet

(a.) from the Cash Budget, ending balance

(b.) from the sales budget, the amounts from Q3 and Q4 that have not yet been collected:Quarter Sold Collected Remaining

Q3 $1,395,990 $1,298,271 $97,719 Q4 $1,447,062 $1,041,885 $405,177

$502,897 Less: Bad Debt $19,901

A/R, net $482,995

(c.) from income statement calculations

(d.) from the ending inventory budget

from prior year, no change

(e.) from prior year, no change

(g.) total from prior year, plus the current investment (shown in the cash budget.)2009 Q1 Q2 Q3 Q4 Total

$1,500,000 $50,000 $75,000 $40,000 $22,000 $1,687,000

(h.) total from prior year, plus the current year's depreciation (shown in the OH budget)2009 Q1 Q2 Q3 Q4 Total($875,000) ($15,625) ($15,625) ($15,625) ($15,625) ($937,500)

(i.) from the raw materials budget, the amount from Q4 that has not yet been paid:Quarter Purchased Paid Remaining

Q4 $645,601 $484,201 $161,400

(j.) Interest accrued (from the income statement), less interest paidInterest accrued $49,880 Interest paid $49,880 Interest Pay $0

(k.)Inc Tax Accrued $259,080 Inc Tax Paid ($113,925) Inc Tax Pay $145,155

(l.) from prior year, no change

(m.) the difference between loans taken out and repayments

the difference between income tax expense (income statement) and income tax paid (cash

CBE:The result here is a little different from the others. Why? Because you can end up owing additional taxes (an income tax payable) or you can end up receiving a refund. If you end up with a negative number, or a tax refund, remember to use that number as a positive deferred tax asset instead of using it as a negative income tax payable. Otherwise you end up with a balance sheet that looks really wierd.

J43

CBE: The result here is a little different from the others. Why? Because you can end up owing additional taxes (an income tax payable) or you can end up receiving a refund. If you end up with a negative number, or a tax refund, remember to use that number as a positive deferred tax asset instead of using it as a negative income tax payable. Otherwise you end up with a balance sheet that looks really wierd.

Loans $0 Repayments $0 Loan Balance $0

(n.) from prior year, no change

(o.)RE, 2006 $506,295 + Net Income $604,520 - Dividends Paid ($40,000)

New RE $1,070,815

New retained earnings is the old retained earnings (2006 Bal Sheet) + net income - dividends


Notes to the Balance Sheet



Bob's BicyclesPro Forma Statement of Cash Flows

For Year ended December 31, 2010

Cash Flow from Operating ActivitiesNet Income $604,520 Adjustments:

Change in Accounts Receivable ($187,799)Change in Raw Materials Inventory ($48,250)Change in Finished Good Inventory ($12,225)Change in Accounts Payable $47,450 Change in Interest Payable $0 Change in Income Tax Payable $145,155 Depreciation $62,500 $6,831

Total Cash Flow from Operating Activities $611,351

Cash Flow from Investing ActivitiesCash Paid for Equipment ($187,000)

Total Cash Flow from Investing Activities ($187,000)

Cash Flow from Financing ActivitiesCash Received from Loans $0 Cash Paid on Loans $0 Cash Paid as Dividends ($40,000)

Total Cash Flow from Financing Activities ($40,000)($30,176)

Total Change in Cash $384,351 Cash Balance, 1/1/07 $0 Cash Balance, 12/31/07 $384,351

Calculating the Change in Cash from Asset Accounts

Beginning A/R $295,196 Ending A/R $482,995

Change to Cash from Accounts Receivable ($187,799)

Beginning Raw Materials Inv. $51,413 Ending Raw Materials Inv. $99,663

Change to Cash from Raw Materials ($48,250)

Beginning Finished Goods Inv. $116,060 Ending Finished Goods Inv. $128,285

Change to Cash from Finished Goods ($12,225)

Calculating the Change in Cash from Liabilities AccountsEnding A/P $161,400 Beginning A/P $113,950

Change to Cash from Accounts Payable $47,450

Ending Int Payable $0 Beginning Int Payable $0

Change to Cash from Interest Payable $0

Ending Inc Tax Payable $145,155 Beginning Inc Tax Payable $0

Change to Cash from Inc Tax Payable $145,155

Documents

Bob's Bicycles - Master Budget 2010