The managers of Gizmo Manufacturing Limited have gathered the following information

to assist you in preparing the master budget for the first quarter of $2024.$

$1.$ Budgeted sales for the next four months are as follows:

January $50,000$

February $60,000$

March $45,000$

April $40,000$

The selling price is $$25\mathrm{.}00$ per unit.

Sales are $100\%$ on credit and $70\%$ are collected in month of sale & $30\%$ in month following

the sale.

$2.$ Accounts receivable are expected to be $$417,870$ on December $31,2023$ & will be collected

In January $2024.$

$3.$ The company produces enough units each month to meet the months sales plus a desired

ending inventory equal to $20\%$ of the next month's estimated sales. The beginning inventory

at January $1,2024$ is expected to be $10,000$ units.

$4.$ Gizmo pays $30\%$ of direct materials in the month of purchase & pays the remaining $70\%$ in the

following month. Each unit of product requires $5$ kg of direct materials at a cost of $$1\mathrm{.}50$ per kg$.$

The company purchases enough direct materials each month for the current month's production

and $10\%$ of next month's production requirements. Beginning & ending inventory for the quarter

of direct materials are budgeted to be $28,000$ for beginning & $26,000$ for ending.

$5.$ The Accounts payable balance is expected to be $$146,200$ at December $31,2023$ & will be

paid in January.

$6.$ The company plans to pays dividends of $$15,000$ in January & March.

$7.$ Gizmo Manufacturing Limited plans to purchase equipment costing $$20,000$ in February

$8.$ Each unit produced requires $\mathrm{.}5$ hours of direct labour at a cost of $$20/$hour$.$

$9.$ The company wishes to maintain a minimum cash balance of $$25,000$ at the end of each month.

$10.$ The company has an agreement with the local bank that allows them to borrow up to $$70,000.$

The interest rate on the loans is $8\%$ and there are no loans outstanding at December $31.$ All

borrowing is done at the start of the month and all repayments are made at the end of the month.

$11.$ The cash balance at December $31,2023$ is budgeted to be $$25,000.$

Required:

$1.$ Using the excel file included in the assignment complete the following budgets for the

first quarter of $2024$ for Gizmo Manufacturing Limited $($January$,$ February & March$).$

Sales Budget & Schedule of Expected Cash Collections

Production Budget

Direct Materials $-$ Purchases & Cash Disbursements Budget

Direct Labour Budget

Cash Budget

$2.$ What will the accounts receivable & accounts payable balances be at March $31,2024?$