KRAUSE INDUSTRIES Balance Sheet December 31, 2013 Assets Current Assets Cash $7,
ID: 2423824 • Letter: K
Question
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2013
Assets
Current Assets
Cash
$7,500
Accounts receivable
82,500
Finished goods inventory (2,000 units)
32,240
Total current assets
$122,240
Property, Plant, and Equipment
Equipment
$41,120
Less: Accumulated depreciation
11,120
30,000
Total assets
$152,240
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,120
Accounts payable
46,120
Total liabilities
72,240
Stockholders' Equity
Common stock
$48,880
Retained earnings
31,120
Total stockholders' equity
80,000
Total liabilities and stockholders' equity
$152,240
4th Qtr. of 2014
Year 2014 Total
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KRAUSE INDUSTRIES
Budgeted Income Statement
For the Year Ending December 31, 2014
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2013
Assets
Current Assets
Cash
$7,500
Accounts receivable
82,500
Finished goods inventory (2,000 units)
32,240
Total current assets
$122,240
Property, Plant, and Equipment
Equipment
$41,120
Less: Accumulated depreciation
11,120
30,000
Total assets
$152,240
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,120
Accounts payable
46,120
Total liabilities
72,240
Stockholders' Equity
Common stock
$48,880
Retained earnings
31,120
Total stockholders' equity
80,000
Total liabilities and stockholders' equity
$152,240
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 $35) $84,000 $280,000 Direct materials used 14,760 69,400 Direct labor 12,500 56,600 Manufacturing overhead applied 10,000 52,880 Selling and administrative expenses 16,880 76,000To 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 $10,842 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 $20,120. It expects to pay $9,120 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 $6,820. In 2014, the company expects to declare and pay an $6,120 cash dividend. Unpaid income taxes at December 31 will be $6,120. The company’s cash budget shows an expected cash balance of $7,950 at December 31, 2014.
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Explanation / Answer
Budgeted Income Statement Sales 280000 Cost of Good Sold 158721.2 Gross Profit 121278.8 Less: Selling & Administration 65158 Interest Expense 3500 Income before tax 52620.8 Less: Income Tax 21048.32 Income after tax 31572.48 Cost of Goods manufactured 189722 Cost of Good Sold 32240+6000*21.0802 158721.2 Ending Inventory 21.08022*3000 63240.67 Opening Inventory 32240 Cost of Goods manufactured Raw Material 69400 Direct Labour 56600 manufacturing Overhead 52880 Depreciation on Equipment 10842 Total 189722 No. ofunits 9000 Cost per unit 21.08022 Opening Inventory 32240
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