Problem 21-6A (Part Level Submission) KRAUSE INDUSTRIES Balance Sheet December 3
ID: 2424654 • Letter: P
Question
Problem 21-6A (Part Level Submission)
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2013
Assets
Current Assets
Cash
$7,500
Accounts receivable
82,500
Finished goods inventory (2,000 units)
32,760
Total current assets
$122,760
Property, Plant, and Equipment
Equipment
$41,380
Less: Accumulated depreciation
11,380
30,000
Total assets
$152,760
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,380
46,380
Total liabilities
72,760
Stockholders' Equity
Common stock
$48,620
Retained earnings
31,380
Total stockholders' equity
80,000
Total liabilities and stockholders' equity
$152,760
4th Qtr. of 2014
Year 2014 Total
(a)
KRAUSE INDUSTRIES
Budgeted Income Statement
For the Year Ending December 31, 2014
Problem 21-6A (Part Level Submission)
Krause Industries’ 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)
32,760
Total current assets
$122,760
Property, Plant, and Equipment
Equipment
$41,380
Less: Accumulated depreciation
11,380
30,000
Total assets
$152,760
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,380
Accounts payable46,380
Total liabilities
72,760
Stockholders' Equity
Common stock
$48,620
Retained earnings
31,380
Total stockholders' equity
80,000
Total liabilities and stockholders' equity
$152,760
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 14,240 69,400 Direct labor 12,500 56,600 Manufacturing overhead applied 10,000 52,620 Selling and administrative expenses 16,620 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 $11,258 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 $20,380. It expects to pay $9,380 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 $7,080. In 2014, the company expects to declare and pay an $6,380 cash dividend. Unpaid income taxes at December 31 will be $6,380. The company’s cash budget shows an expected cash balance of $7,950 at December 31, 2014.
Explanation / Answer
The budgeted income statement is given below:
KRAUSE INDUSTRIES Budgeted Income Statement For the Year Ending December 31, 2014 Sales (8,000*35) 280,000 Cost of Goods Sold Finished Goods Inventory, January 1 32,760 Add Cost of Goods Manufactured (69,400 + 56,600 + 52,620) 178,620 Cost of Goods Available for Sale 211,380 Less Finished Goods Inventory, December 31 (3,000*20) 60,000 Cost of Goods Sold 151,380 Gross Profit 128,620 Less Selling and Administrative Expenses 76,000 Income from Operations 52,620 Less Interest Expense 3,500 Income before Taxes 49,120 Less Income Tax Expense (49,120*40%) 19,648 Net Income $29,472Related Questions
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