The management of Mecca Copy, a photocopying center located on University Avenue
ID: 2379517 • Letter: T
Question
The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:Ending
Balances
Cash ?
Accounts receivable $9,700
Supplies inventory $4,600
Equipment $32,000
Accumulated depreciation $15,300
Accounts payable $1,730
Common stock $5,300
Retained earnings ?
The beginning balance of retained earnings was $33,000, net income is budgeted to be $11,000, and dividends are budgeted to be $2,900.
Required:
Prepare the company's budgeted balance sheet.
Explanation / Answer
The only missing values here are Cash and Retained Earnings. We will solve for R/E and plug the B/S to find Cash. Beginning Retained Earnings was 33,000. 33,000 (beginning) +11,000 (net income) - 2,900 (dividends) = 41,100 (ending Retained Earnings Balance). Now, we add each side of the balance sheet. Starting with Liab/Equity: A/P 1,730 C/S 5,300 R/E 41,100 = 48,130 So total assets must also equal 48,130 for the balance sheet to balance. A/R 9700 Supplies 4600 EQ 32000 A/D (15,300) = 31,000 + Cash = 48,130 The assets listed total 31,000 and the total should be 48,130. The missing 17,130 is the Cash balance. Hope this helps!
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