Question

Kurian Industries' balance sheet at December 31, 2015, is presented below.

	KURIAN INDUSTRIES Balance Sheet December 31, 2015
	Assets
	Current assets
	Cash			$7,500
	Accounts receivable			82,300
	Finished goods inventory (2,500 units)			29,600
	Total current assets			119,400
	Equipment	$39,700
	Less: Accumulated depreciation	10,400		29,300
	Total assets			$148,700
	Liabilities and Shareholders' Equity
	Liabilities
	Notes payable			$25,500
	Accounts payable			45,100
	Total liabilities			70,600
	Shareholders’ equity
	Common stock	$49,700
	Retained earnings	28,400
	Total shareholders’ equity			78,100
	Total liabilities and shareholders’ equity			$148,700

Budgeted data for the year 2016 include the following.

		Q4 of 2016			Year 2016 Total
	Sales budget (8,300 units at $39)	$97,110			$323,700
	Direct materials used	16,700			70,100
	Direct labor	12,500			55,500
	Manufacturing overhead applied	11,000			32,800
	Selling and administrative expenses	18,100			75,700

To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2016, the production budget shows 8,800 required units of output. The total unit cost of production is expected to be $18. Kurian Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $4,800 for depreciation on equipment. The company expects interest expense to be $3,200 for the year and income taxes to be 30% of income before income taxes.

All sales and purchases are on account. The company expects to collect 60% of the quarterly sales in cash within the quarter and the remainder in the following quarter. It pays direct materials purchased from suppliers 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 2016, the company expects to purchase additional equipment costing $18,000. It expects to pay $8,200 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,200, above). Accounts payable at December 31, 2016, includes amounts due to suppliers (see above) plus other accounts payable of $6,000. In 2016, the company expects to declare and pay a $5,000 cash dividend. Unpaid income taxes at December 31 will be $9,972. The company's cash budget shows an expected cash balance of $56,938 at December 31, 2016.

1. Prepare a budgeted balance sheet at December 31, 2016. (Round answers to 0 decimal places, e.g. 125. List Current assets in order of liquidity.)

Answer 1

Kurian Industries' Budgeted balance sheet at December 31, 2016, is presented below.( amount in $)
	KURIAN INDUSTRIES
	Budgeted Balance Sheet
	31-Dec-16
	Assets
	Current assets
	Cash			$15,000
	Accounts receivable			121,144
	Finished goods inventory (2,500 units)			54,180
	Total current assets			190,324
	Equipment	$57,700
	Less: Accumulated depreciation	15,200		42,500
	Total assets			$232,824
	Liabilities and Shareholders' Equity
	Liabilities
	Notes payable			$20,500
	Accounts payable			77,450
	Total liabilities			120,734
	Shareholders’ equity
	Common stock	$49,700
	Retained earnings	62,390
	Total shareholders’ equity			112,090
	Total liabilities and shareholders’ equity			$232,824

Workings

Calculation of	Accounts Payable	45100
	Credit purchases	8350				Sales	97110
	other accounts payable	6000				Less Cash collected 60% of the sale	58266
		59450				Receivables	38844
	for equipment	18000
		77450
						Purchases	16700
Calculation of	Notes Payable	25500				Cash received 50% of the above	8350
	paid to note payable	-5000				Payables	8350
		20500
						Cash	7500
						Cash collected 60% of the sale	58266
						Cash received 50% of the above	-8350
						assets	-18000
Calculation of receivables	opening balance of Accounts Receivable	82300				Dividend	-5000
	Receivables	38844				expenses	-8200
		121144					26216
	Sales	97110
	Cost of production	44820		Sales Value	97110
	Selling and distribution expence (18100-4800)	13300		Selling price per unit	39	opening finished goods	2500
	Cost of goods sold	58120		No of units sold	2490	Produced	3000
	Profit	38990		COP per unit	18	Sales	-2490
	Dividends paid	-5000		COP Value	44820	Closing stock	3010
	Transferred to Profit & loss account	33990				cost of production per unit	18
						cost of production Value 3010 units X $18	54180