Budgeted Balance Sheet – Jan – Mar 2017

Budgeted Balance Sheet – Jan – Mar 2017

Subject: Business    / Accounting
Question

Information :
PLANNING DATA FOR 2017

All Sales are on Credit
Collections of Accounts Receivable:
Month of Service     48.00%
Month following Service     52.00%

Actual December 2016 Sales     $200,000
Expected Sales in Dollars
January     $240,000
February     $195,000
March     $175,000
April     $210,000

Cost of Goods Sold as a percentage of selling price.     62.00%

Planned ending inventory as a percentage of next month’s required inventory.     70.00%

Purchases are are all on credit.
Purchases paid in current month     25.00%
Purchases paid in next month     75.00%
Actual Purchases made in December 2016     $141,360

Sales commission as a percent of sales     2.50%
Sales commission are paid one month after the month incurred.

Advertising expenses have a fixed and variable portion:
Fixed portion     $4,400
The fixed portion of the advertising is paid in the current month.
Variable portion as a percentage of sales     1.00%
The variable portion is paid one month after the month incurred.

Insurance policy:
Months of insurance coverage paid for     12
The policy period is from March 1 to February 28 each year
The premium to be paid on March 1, 2017 is     $2,100
The premium will be charged to prepaid insurance

Selling and Administrative expenses have a fixed and variable portion:
Fixed portion is paid in the month incurred     $26,000
Variable portion as a percentage of sales     3.00%
S&A expenses are paid one month after the month incurred

Depreciation expense per month     $4,600

The annual interest rate on the long term debt is     4.50%
Interest is incurred on the principal balance outstanding each month.
Interest is paid on a quarterly basis. Interest for November to January will be paid February 1.
No principal payments are scheduled to be made on the long-term debt until August of 2017

Income Tax rate     30%
Accrued taxes are paid on the 15th of January, April, July and October

The Company’s Board of Directors plans to declare a dividend on February 20     $11,000
It will be paid on March 15.
BALANCE SHEET
December 31, 2016

ASSETS
Current Assets
Cash     $108,200
Accounts Receivable     1,04,000
Inventory     1,04,160
Prepaid Insurance     350
Total Current Assets     3,16,710

Property Plant and Equipment
Office Equipment     2,76,000
Accumulated Depreciation     -55,200
Total Property Plant and Equipment     2,20,800

Total Assets     $537,510

LIABILITIES AND SHAREHOLDERS EQUITY
LIABILITIES
Current Liabilities
Accounts Payable – Purchases     $106,020
Sales Commission Payable     5,000
Selling and Admin Payable     6,000
Advertising Payable     2,000
Interest Payable     1,313
Dividends Payable     –
Income Taxes Payable     15,530
Total Current Liabilities     1,35,863

Long Term Debt     1,75,000

Total Liabilities     3,10,863

SHAREHOLDERS’ EQUITY
Common Stock     1,40,000
Retained Earnings     86,647

Total Shareholders’ Equity     2,26,647

Total Liabilities and Shareholders Equity     $537,510

Prepare Budgeted Balance Sheet for the Quartery