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Krause Industries? balance sheet at December 31, 2016, is presented below.
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash $7,500
Accounts receivable 73,500
Finished goods inventory (1,500 units) 26,320
Total current assets 107,320
Property, Plant, and Equipment
Equipment $40,010
Less: Accumulated depreciation 10,200 29,810
Total assets $137,130
Liabilities and Stockholders' Equity
Liabilities
Notes payable $27,820
Accounts payable 45,040
Total liabilities 72,860
Stockholders' Equity
Common stock $38,930
Retained earnings 25,340
Total stockholders' equity 64,270
Total liabilities and stockholders' equity $137,130
Budgeted data for the year 2017 include the following.
2017
Quarter 4 Total
Sales budget (8,000 units at $32) $76,800 $256,000
Direct materials used 11,280 62,500
Direct labor 12,500 50,900
Manufacturing overhead applied 10,000 49,660
Selling and administrative expenses 15,250 75,000
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $10,450 cash dividend.
The company?s cash budget shows an expected cash balance of $5,880 on December 31, 2017. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2017, the company expects to purchase additional equipment costing $9,380. $7,848 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Krause expects to pay $9,450 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2017, includes amounts due suppliers (see above) plus other accounts payable of $7,540. Unpaid income taxes on December 31 will be $7,700.
Prepare a budgeted classified balance sheet on December 31, 2017.
Answer:
KRAUSE INDUSTRIES
Balance Sheet
31-Dec-2017
Assets Amount
Current Assets
Cash $5,880
Accounts receivable ($76,800 x 40%) $30,720
Finished goods inventory (2,500 units x $18) $45,000
Total current assets $81,600
Property, Plant, and Equipment
Equipment $49,390
Less: Accumulated depreciation -$18,048 $31,342
Total assets $112,942
Liabilities and Stockholders' Equity
Liabilities
Notes payable ($27,820-$9,450) $18,370
Income Tax Payable $7,700
Accounts payable $7,540
Total liabilities $33,610
Stockholders' Equity
Common stock $38,930
Retained earnings $40,402
Total stockholders' equity $79,332
Total liabilities and stockholders' equity $112,942