Krause Industries\u2019 balance sheet at December 31, 2013, is presented below.<\/p>\n
KRAUSE INDUSTRIES<\/b><\/p>\n
Balance Sheet<\/p>\n
December 31, 2013<\/p>\n
Assets<\/b><\/p>\n
Current Assets<\/p>\n
Cash<\/p>\n
$7,500<\/p>\n
Accounts receivable<\/p>\n
82,500<\/p>\n
Finished goods inventory (2,000 units)<\/p>\n
34,960<\/p>\n
Total current assets<\/p>\n
$124,960<\/p>\n
Property, Plant, and Equipment<\/p>\n
Equipment<\/p>\n
$42,480<\/p>\n
Less: Accumulated depreciation<\/p>\n
12,480<\/p>\n
30,000<\/p>\n
Total assets<\/p>\n
$154,960<\/p>\n
Liabilities and Stockholders’ Equity<\/b><\/p>\n
Liabilities<\/p>\n
Notes payable<\/p>\n
$27,480<\/p>\n
Accounts payable<\/p>\n
47,480<\/p>\n
Total liabilities<\/p>\n
74,960<\/p>\n
Stockholders’ Equity<\/p>\n
Common stock<\/p>\n
$47,520<\/p>\n
Retained earnings<\/p>\n
32,480<\/p>\n
Total stockholders’ equity<\/p>\n
80,000<\/p>\n
Total liabilities and stockholders’ equity<\/p>\n
$154,960<\/p>\n
Additional information accumulated for the budgeting process is as follows.<\/p>\n
Budgeted data for the year 2014 include the following.<\/p>\n
4th Qtr. of 2014<\/b><\/p>\n
Year 2014 Total<\/b><\/p>\n
Sales budget (8,000 units at $35)<\/p>\n
$84,000<\/p>\n
$280,000<\/p>\n
Direct materials used<\/p>\n
12,040<\/p>\n
69,400<\/p>\n
Direct labor<\/p>\n
12,500<\/p>\n
56,600<\/p>\n
Manufacturing overhead applied<\/p>\n
10,000<\/p>\n
51,520<\/p>\n
Selling and administrative expenses<\/p>\n
15,520<\/p>\n
76,000<\/p>\n
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 $20. Krause Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $13,018 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.<\/p>\n
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 $21,480. It expects to pay $10,480 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 $8,180. In 2014, the company expects to declare and pay an $7,480 cash dividend. Unpaid income taxes at December 31 will be $7,480. The company\u2019s cash budget shows an expected cash balance of $7,950 at December 31, 2014.<\/p>\n
(a)<\/b><\/p>\n
Your answer is correct.<\/p>\n
Prepare a budgeted income statement for 2014.<\/p>\n
KRAUSE INDUSTRIES<\/b><\/p>\n
Budgeted Income Statement<\/p>\n
For the Year Ending December 31, 2014<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
$<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For Sale Cost of Goods Manufactured Cost of Goods Sold Finished Goods Inventory, December 31 Finished Goods Inventory, January 1 Gross Profit Income before Income Taxes Income from Operations Income Tax Expense Interest Expense Net Income\/ (Loss) Sales Selling and Administrative Expenses<\/p>\n
$<\/p>\n
Cost of Goods Available For Sale Cost of Goods Manufactured Cost of Goods Sold Finished Goods Inventory, December 31 Finished Goods Inventory, January 1 Gross Profit Income before Income Taxes Income from Operations Income Tax Expense Interest Expense Net Income\/ (Loss) Sales Selling and Administrative Expenses<\/p>\n
Cost of Goods Available For Sale Cost of Goods Manufactured Cost of Goods Sold Finished Goods Inventory, December 31 Finished Goods Inventory, January 1 Gross Profit Income before Income Taxes Income from Operations Income Tax Expense Interest Expense Net Income\/ (Loss) Sales Selling and Administrative Expenses<\/p>\n
Cost of Goods Available For Sale Cost of Goods Manufactured Cost of Goods Sold Finished Goods Inventory, December 31 Finished Goods Inventory, January 1 Gross Profit Income before Income Taxes Income from Operations Income Tax Expense Interest Expense Net Income\/ (Loss) Sales Selling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income\/ (Loss)SalesSelling and Administrative Expenses<\/p>\n
$<\/p>\n
Click if you would like to Show Work for this question:<\/b><\/p>\n
Open Show Work<\/p>\n
SHOW SOLUTION<\/b><\/a><\/p>\n SHOW ANSWER<\/b><\/a><\/p>\n LINK TO TEXT<\/b><\/a><\/p>\n LINK TO TEXT<\/b><\/a><\/p>\n Attempts: 2 of 3 used<\/b><\/p>\n (b)<\/b><\/p>\n Prepare a budgeted balance sheet at December 31, 2014. (List assets in order of liquidity.)<\/b><\/p>\n KRAUSE INDUSTRIES<\/b><\/p>\n Budgeted Balance Sheet<\/p>\n December 31, 2014<\/p>\n Assets<\/b><\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n $<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n Accounts Payable Accounts Receivable Accumulated Depreciation Cash Common Stock Equipment Finished Goods Inventory Income Taxes Payable Notes Payable Retained Earnings<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n $<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n $<\/p>\n AddLess: Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n $<\/p>\n Liabilities and Stockholders’ Equity<\/b><\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n $<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n $<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n $<\/p>\n Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity<\/p>\n $<\/p>\n","protected":false},"excerpt":{"rendered":" Krause Industries\u2019 balance sheet at December 31, 2013, is presented below. KRAUSE INDUSTRIES Balance Sheet December 31, 2013 Assets Current Assets Cash $7,500 Accounts receivable 82,500 Finished goods inventory (2,000 units) 34,960 Total current assets $124,960 Property, Plant, and Equipment Equipment Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-175111","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/175111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=175111"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/175111\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=175111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=175111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=175111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}