Question

The following information is available for Zetrov Company. The cash budget for March shows an ending bank loan of $19,000 and an ending cash balance of $59,700. The sales budget for March indicates sales of $138,000. Accounts receivable are expected to be 70% of the current-month sales. The merchandise purchases budget indicates that $90,800 in merchandise will be purchased on account in March. Purchases on account are paid 100% in the month following the purchase. Ending inventory for March is predicted to be 780 units at a cost of $35 each. The budgeted income statement for March shows net income of $49,800. Depreciation expense of $2,800 and $27,800 in income tax expense were used in computing net income for March. Accrued taxes will be paid in April. The balance sheet for February shows equipment of $82,200 with accumulated depreciation of $31,800, common stock of $34,000, and ending retained earnings of $9,800. There are no changes budgeted in the equipment or common stock accounts.

Prepare a budgeted balance sheet for March.

Answer 1

Zetrov Company

Budgeted Balance Sheet for the month of March

Assets

Current assets:

Cash $59,700

Accounts receivable 96,600

Inventory 27,300 $183,600

Long-term assets:

Equipment $82,200

Accumulated depreciation (34,600) $47,600

Total assets $231,200

Liabilities and Equity:

Current liabilities:

Bank loan payable $19,000

Accounts payable 90,800

Income tax payable 27,800 $137,600

Equity:

Common stock $34,000

Retained earnings 59,600 $93,600

Total liabilities and equity $231,200

Step-by-step explanation:

a) Data and Calculations:

Ending Bank Loan = $19,000

Ending cash balance = $59,700

Accounts receivable = $96,600 ($138,000 * 70%)

Accounts payable = $90,800

Ending inventory = $27,300 (780 * $35)

Net income = $49,800

Income tax payable = $27,800

Equipment at cost = $82,200

Accumulated depreciation, beginning $31,800

Depreciation for the month = 2,800

Accumulated depreciation, ending = $34,600

Retained earnings, beginning = $9,800

Net income 49,800

Retained earnings, ending $59,600