Krause Industries’ balance sheet at December 31, 2016, is presented below. KRAUS
ID: 2656308 • Letter: K
Question
Krause Industries’ balance sheet at December 31, 2016, is presented below.
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash
$7,500
Accounts receivable
73,500
Finished goods inventory (1,500 units)
25,120
Total current assets
106,120
Property, Plant, and Equipment
Equipment
$40,860
Less: Accumulated depreciation
10,980
29,880
Total assets
$136,000
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,110
46,130
Total liabilities
72,240
Stockholders' Equity
Common stock
$36,410
Retained earnings
27,350
Total stockholders' equity
63,760
Total liabilities and stockholders' equity
$136,000
Budgeted data for the year 2017 include the following.
Quarter 4
Total
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $8,100 cash dividend.
The company’s cash budget shows an expected cash balance of $5,880 at December 31, 2017. 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 2017, the company expects to purchase additional equipment costing $11,500. $7,437 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Krause expects to pay $8,280 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2017, includes amounts due suppliers (see above) plus other accounts payable of $7,710. Unpaid income taxes at December 31 will be $7,690.
Prepare a budgeted classified balance sheet at December 31, 2017.
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash
$7,500
Accounts receivable
73,500
Finished goods inventory (1,500 units)
25,120
Total current assets
106,120
Property, Plant, and Equipment
Equipment
$40,860
Less: Accumulated depreciation
10,980
29,880
Total assets
$136,000
Liabilities and Stockholders' Equity
Liabilities
Notes payable
$26,110
Accounts payable46,130
Total liabilities
72,240
Stockholders' Equity
Common stock
$36,410
Retained earnings
27,350
Total stockholders' equity
63,760
Total liabilities and stockholders' equity
$136,000
KRAUSE INDUSTRIES Budgeted Balance Sheet For the Year Ending December 31, 2017 Assets Current Assets Cash Accounts Payable Finished Goods Inventory Total Current Assets Property, Plant and Equipment Equipment Less Accumulated Depreciation Total AssetsExplanation / Answer
Krause Industries Budgeted Balance Sheet December 31, 2017 Assets $ $ Current Assets Cash 5,880 Accounts Receivable 30,720 Finished Goods Inventory 45,000 Total Current Assets 81,600 Property, Plant and Equipment Equipment 52,360 Less: Accumulated Depreciation (18,417) 33,943 Total Assets 115,543 Liabilities and Stochholders' Equity $ $ Current Liabilities Notes Payable 17,830 Accounts Payable 14,095 Income Taxes Payable 7,690 Total Current Liabilities 39,615 Stockholders' Equity Common Stock 36,410 Retained Earnings 40,478 Total Stockholders' Equity 76,888 Total Liabilities and Stockholders' Equity 116,503
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