Box Printing of Baltimore has applied for a loan. Bank of America has requested

Question

Box Printing of Baltimore has applied for a loan. Bank of America has requested a budgeted balance sheet at April 30, 2011, and a budgeted statement of cash flows for April. As Box Printings controller, you have assembled the following information:

a. March 31 equipment balance, $80,900; accumulated depreciation, $12,900

b. April capital expenditures of $16,900 budgeted for cash purchase of equipment

c. April depreciation expense, $600

d. Cost of goods sold, 45% of sales

e. Other April operating expenses, including income tax, total $33,000, 40% of which will be paid in cash and the remainder accrued at the end of April

f. March 31 stockholders equity, $136,700

g. March 31 cash balance, $50,200

h. April budgeted sales, $84,000, 60% of which is for cash; of the remaining 40%, half will be collected in April and half in May

i. April cash collections on March sales, $15,300

j. April cash payments of March 31 liabilities incurred for March purchases of inventory, $8,600

k. March 31 inventory balance, $11,800

l. April purchases of inventory, $10,800 for cash and $37,200 on credit. Half the credit purchases will be paid in April and half in May.

Requirements 1. Prepare the budgeted balance sheet for Box Printing at April 30, 2011. Show separate computations for cash, inventory, and stockholders equity balances. 2

Explanation / Answer

Income Statement Sales $ 84,000.00 less: cost of goods sold $ 37,800.00 Gorss profit $ 46,200.00 Operating Expenses $ 33,000.00 Depreciation $       600.00 $ 33,600.00 Net Income $ 12,600.00 Inventory Beginning Inventory $ 11,800.00 Add: purchase (10800+37200) $ 48,000.00 $ 59,800.00 Less: cost of goods sold $ 37,800.00 Ending inventory $ 22,000.00 Cash Budget Balance, march 31 $     50,200.00 Collection from customers: For March sale $     15,300.00 For April Sale: Cash sale $     50,400.00 50% of ($84000 * 40%) $     16,800.00 Total collection $     82,500.00 Total cash available $ 1,32,700.00 Cash disbursements Operating expense (40% of $33000) $     13,200.00 Payment for inventory For march purchase $       8,600.00 For April Purchase: Cash $     10,800.00 Half of the credit purchase (50%*37200) $     18,600.00 Total payment for inventory $     38,000.00 Purchase of eqipment $     16,900.00 Total cash disbursements $     68,100.00 Balance as on April 30 $     64,600.00 Balance sheet Assets Current Assets Cash $     64,600.00 Accounts Receivable $     16,800.00 (50%of 40% * $84000) Inventory $     22,000.00 Total current assets $ 1,03,400.00 Equipment (80900+16900) $     97,800.00 Less: accumulated depreciation (12900+600) $     13,500.00 Equipment , net $     84,300.00 Total Assets $ 1,87,700.00 Liabilities and equities Current Liabilities Accounts payable: Inventory (50% * 37200) $     18,600.00 operating expenses (.6*33000) $     19,800.00 Total Liabilities $     38,400.00 Stockholders' equity Balance , March 31 $ 1,36,700.00 Add: Net profit $ 12,600.00 Total stockholders' equity $ 1,49,300.00 Total Liabilities & stockholders' Equity $ 1,87,700.00

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