Glendo Industries\' balance sheet at December 31, 2008, is presented below. GLEN
ID: 2428561 • Letter: G
Question
Glendo Industries' balance sheet at December 31, 2008, is presented below.GLENDO INDUSTRIES
Balance Sheet
December 31, 2008
Assets
Current assets
Cash $7,500
Accounts receivable 82,500
Finished goods inventory (2,000 units)
30,000
Total current assets 120,000
Property, plant, and equipment
Equipment $40,000
Less: Accumulated depreciation
10,000
30,000
Total assets
$150,000
Liabilities and Stockholders' Equity
Liabilities
Notes payable $25,000
Accounts payable
45,000
Total liabilities 70,000
Stockholders' equity
Common stock $50,000
Retained earnings
30,000
Total stockholders' equity
80,000
Total liabilities and stockholders' equity
$150,000
Additional information accumulated for the budgeting process is as follows.
Budgeted data for the year 2009 include the following.
4th Qtr.
of 2009
Year 2009
Total
Sales budget (8,000 units at $35) $84,000 $280,000
Direct materials used 17,000 69,400
Direct labor 12,500 56,600
Manufacturing overhead applied 10,000 54,000
Selling and administrative expenses 18,000 76,000
To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2009, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $20. Glendo Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $4,000 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 30% 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 2009, the company expects to purchase additional equipment costing $19,000. It expects to pay $8,000 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2009, includes amounts due suppliers (see above) plus other accounts payable of $5,700. In 2009, the company expects to declare and pay a $5,000 cash dividend. Unpaid income taxes at December 31 will be $5,000.The company's cash budget shows an expected cash balance of $7,950 at December 31, 2009.
Prepare a budgeted income statement for 2009 and a budgeted balance sheet at December 31, 2009. In preparing the income statement, you will need to compute cost of goods manufactured (direct materials + direct labor + manufacturing overhead) and finished goods inventory (December 31, 2009). (For the balance sheet, list assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2.)
GLENDO INDUSTRIES
Budgeted Income Statement
For the Year Ending December 31, 2009
$
Cost of goods sold
Finished goods inventory, January 1 $
Cost of goods available for sale
Cost of goods sold
Gross profit
Income from operations
Income before income taxes
Net income
$
GLENDO INDUSTRIES
Budgeted Balance Sheet
December 31, 2009
Assets
Current assets
$
Total current assets $
Property, plant, and equipment
Less:
Total assets
$
Liabilities and Stockholders' Equity
Liabilities
$
Total liabilities $
Stockholders' equity
Total stockholders' equity
Total liabilities and stockholders' equity
$
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Explanation / Answer
production cost of 9000 units Direct materials $69,400 Direct labor $56,600 Manufacturing overheads $54,000 9000 units cost of production $180,000 Finished goods at the beginning $30,000 9000 unitsmanufacturing cost $180,000 Total stock available for sale $210,000 Less: Finished goods inventory-ending(3000*20) $60,000 Cost of goods sold $150,000 Sales $280,000 Less: cost of goods sold $150,000 Gross profit $130,000 Less: selling and administrative expenses $76,000 Depreciation on plant $4,000 Interest expenses $3,500 Total expenses $83,500 Income before taxes $46,500 Income tax 30% on income $13,950 Net income $32,550 Cash on1.1.2009 $7,500 cash collected from sale of 4 thquarter $50,400 Total cash available for payments $57,900 Less: payment against purchases of 4th quarter $15,500 Direct labor $12,500 Manufacturing overheads $10,000 Dividends paid in cash $5,000 Payments against notes $8,000 Ending balance of cash $6,900 Balancesheet as on December 31,2009 Assets: Current assets: cash $6,900 accounts receivable(82500+33600) $109,100 Incventory 3000units$20 per unit $60,000 total current assets $176,000 property,plant and equipment $40,000 Additions $19,000 Total equipment $59,000 Less: Accumulated depreciation $14,000 Net fixed assets $45,000 Total assets $221,000 Liabilities Notes payable(25000-8000) $17,000 Accounts payable(45000+8500+19000) $72,500 Income tax payable(5000+13950) $18,950 stock holders equity common stock $50,000 Retained earnings $30000 Add:Net income current year $32550 $62,550 $221,000
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