Preparing the financial budget—budgeted balance sheet

Barker, Inc. has the following balance sheet at December 31, 2018:

Barker projects the following transactions for 2019:

Sales on account, \(20,000

Cash receipts from customers from sales on account, \)17,600

Purchase of raw materials on account, \(7,000

Payments on account, \)3,500

Total cost of completed products, \(16,600, which includes the following:

Raw materials used, \)7,100

Direct labor costs incurred and paid, \(3,900

Manufacturing overhead costs incurred and paid, \)4,800

Depreciation on manufacturing equipment, \(800

Cost of goods sold, \)14,800

Selling and administrative costs incurred and paid, \(500

Purchase of equipment, paid in 2019, \)2,000

Prepare a budgeted balance sheet for Barker, Inc. for December 31, 2019. (Hint: It may be helpful to trace the effects of each transaction on the accounting equation to determine the ending balance of each account.)

Step by step solution

01

Preparation of budgeted balance sheet

Barker Inc. Budgeted Balance Sheet For December 31, 2019
Assets
Current Assets:
Cash	$5,300
Accounts Receivables	$3,800
Raw material inventory	$400
Finished goods inventory	$3,150
Total current assets		$12,650
Property, plant, and equipment
Equipment	18,000
Less: Accumulated depreciation	($2,300)	$15,700
Total Assets		$28,350
Liabilities
Current Liabilities:
Accounts payable	$4,500
Stockholder’s Equity
Common stock, no par	$6,500
Retained earnings	$17,350
Total stockholder’s equity		$23,850
Total liabilities and stockholder’s equity		$$28,350

02

Preparation of cash budget

Cash in beginning	$2,400
Cash receipts from customers from sales on account	$17,600
Cash available	$20,000
Less: Payments
Payments on account	$3,500
Direct labor cost incurred and paid	$3,900
Manufacturing overhead	$4,800
Selling and administrative expenses	$500
Purchase of equipment	$2,000
Total cash payments	$12,700
Ending cash balance	$5,300

Unlock Step-by-Step Solutions & Ace Your Exams!

• Full Textbook Solutions

  Get detailed explanations and key concepts

• Unlimited Al creation

  Al flashcards, explanations, exams and more...

• Ads-free access

  To over 500 millions flashcards

• Money-back guarantee

  We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!