Preparing a financial budget—budgeted balance sheet

Use the following June actual ending balances and July 31, 2018, budgeted amounts for Omas to prepare a budgeted balance sheet for July 31, 2018.

a. June 30 Merchandise Inventory balance, \(17,770

b. July purchase of Merchandise Inventory, \)4,400, paid in cash

c. July payments of Accounts Payable, \(8,400

d. June 30 Accounts Payable balance, \)10,700

e. June 30 Furniture and Fixtures balance, \(34,100; Accumulated Depreciation balance, \)29,880

f. June 30 total stockholders’ equity balance, \(28,020

g. July Depreciation Expense, \)500

h. Cost of Goods Sold, 60% of sales

i. Other July expenses, including income tax, \(2,000, paid in cash

j. June 30 Cash balance, \)11,600

k. July budgeted sales, all on account, \(12,600

l. June 30 Accounts Receivable balance, \)5,130

m. July cash receipts from collections on account, $14,700

(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	$11,500
Accounts Receivables	$3,030
Raw material inventory	$17,770
Total current assets		$32,300
Property, plant, and equipment
Equipment	34,100
Less: Accumulated depreciation	($30,380)	$3,720
Total Assets		$36,020
Liabilities
Current Liabilities:
Accounts payable	$2,300
Stockholder’s Equity
Common stock, no par	$28,020
Retained earnings	$5,700
Total stockholder’s equity		$33,720
Total liabilities and stockholder’s equity		$36,020

02

Preparation of cash budget

Cash in beginning (June 30)	$11,600
ADD: Cash receipts from customers from sales on account	$14,700
Cash available	$26,300
Less: Payments
Merchandise inventory	$4,400
Accounts payable	$8,400
Other expenses	$2,000
Total cash payments	$14,800
Ending cash balance	$11,500

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!