Reference no: EM13571665

Krause Industries Balance Sheet December 31, 2013
Assets
Current assets
Cash		$    7,500?
Accounts receivable		82,500
Finished goods inventory (1,000 units)		15,000
Total current assets		105,000
Property, plant, and equipment
Equipment	$40,000
Less: Accumulated depreciation	10,000	30,000
Total assets		$135,000

Liabilities and Stockholders' Equity Liabilities Notes payable $25,000? Accounts payable 45,000 Total liabilities 70,000 Stockholders' equity Common stock $40,000 Retained earnings 25,000 Total stockholders' equity 65,000 Total liabilities and stockholders' equity??? $135,000

Additional information accumulated for the budgeting process is as follows.

Budgeted data for the year 2014 include the following.

4th Qtr. of 2014 Year 2014 Total Sales budget (8,000 units at $32) $76,800 $256,000 Direct materials used 17,000 62,500 Direct labor 12,500 50,900 Manufacturing overhead applied 10,000 48,600 Selling and administrative expenses 18,000 75,000

To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2014, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Clarksean Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $4,000 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes.

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 2014, the company expects to purchase additional equipment costing $9,000. It expects to pay $8,000 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2014, include amounts due suppliers (see above) plus other accounts payable of $6,500. In 2014, the company expects to declare and pay an $8,000 cash dividend. Unpaid income taxes at December 31 will be $5,000. The company's cash budget shows an expected cash balance of $6,980 at December 31, 2014.

Instructions

Prepare a budgeted income statement for 2014 and a budgeted balance sheet at December 31, 2014. In preparing the income statement, you will need to compute cost of goods manufactured and finished goods inventory (December 31, 2014). This is what I have: Assets Current Assets Cash                                     6980 Accounts Recievable            33,000 Finished Goods                    54,000 Total Current Assets             93,980 Property Plant, and Equipment    40,000 Less: Accumulated Depreciation (14,000)    26,000 Total Assets Liabilities and Stockholdets Equity Liabiliies Notes Payable                      17,000 Accounts Payable                 15,000 Income Tax Payable              5,000 Total Liabilities                       37,000