In: Accounting
PANTHER CORPORATION Expected Account Balances for December 31, Year 2
Cash $ 5,600
Accounts receivable 328,000
Inventory (January 1, Year 2) 300,000
Plant and equipment 560,000
Accumulated depreciation $ 172,000
Accounts payable 188,000
Notes payable (due within one year) 208,000
Accrued payables 101,000
Common stock 360,000
Retained earnings 514,600
Sales revenue 2,480,000
Other income 52,000
Manufacturing costs Materials 831,000
Direct labor 881,000
Variable overhead 581,000
Depreciation 28,000
Other fixed overhead 39,000
Marketing Commissions 96,000
Salaries 72,000
Promotion and advertising 196,000
Administrative Salaries 72,000
Travel 14,000
Office costs 44,000
Income taxes - Dividends 28,000 $ 4,075,600
$ 4,075,600 Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 400,000 units, and planned sales volume is 350,000 units. Sales and production volume was 250,000 units last year. The company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate.
The actual income statement for last year follows:
PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1 Revenues
Sales revenue $ 1,900,000
Other income 80,000 $ 1,980,000 Expenses
Cost of goods sold
Materials $ 540,000
Direct labor 552,000
Variable overhead 352,000
Fixed overhead 56,000 $ 1,500,000
Beginning inventory 300,000 $ 1,800,000
Ending inventory 300,000 $ 1,500,000
Selling Salaries $ 62,000
Commissions 68,000
Promotion and advertising 134,000 264,000
General and administrative Salaries $ 64,000
Travel 9,500 Office costs 40,000 113,500
Income taxes 41,000 1,918,500
Operating profit 61,500
Beginning retained earnings 481,100
Subtotal $ 542,600
Less dividends 28,000
Ending retained earnings $ 514,600
Required: Prepare a budgeted income statement and balance sheet using Excel template.
Prepare the budgeted income statement as follows
PC Inc | |||
Budgeted Income Statement | |||
For the Year Ended December 31, Year 2 | |||
Sales revenue | $2,480,000 | ||
Other income | $52,000 | ||
Total revenues | $2,532,000 | ||
Expenses | |||
Cost of goods sold | |||
Materials | 831,000 | ||
Direct labor | 881,000 | ||
Variable overhead | 581,000 | ||
Depreciation and Other fixed costs | 67,000 | $2,360,000 | |
Add: Beginning inventory | $300,000 | ||
$2,660,000 | |||
Deduct: Ending inventory | $590,000 | ||
Total cost of goods sold | $2,070,000 | ||
Selling costs | |||
Salaries | $72,000 | ||
Marketing commissions | $96,000 | ||
Promotion and advertising | $196,000 | ||
Total selling costs | $364,000 | ||
Administrative costs | |||
Salaries | $72,000 | ||
Travel | $14,000 | ||
Office costs | $44,000 | ||
Total administrative costs | $130,000 | ||
Income tax benefit | ($12,800) | ||
Total expenses | $2,551,200 | ||
Net loss | ($19,200) |
Prepare budgeted balance sheet as follows
PC Inc | ||
Budgeted Balance Sheet | ||
December 31, Year 2 | ||
Assets | ||
Current Assets | ||
Cash | $5,600 | |
Accounts receivable | 328,000 | |
Inventory | 590,000 | |
Income tax benefit | 12,800 | |
Total current assets | $936,400 | |
Plant and equipment | 560,000 | |
Less: Accumulated depreciation | -172,000 | 388,000 |
Total Assets | $1,324,400 | |
Liabilities and Stockholders' Equity | ||
Current Liabilities | ||
Accounts payable | 188,000 | |
Notes payable (due within one year) | 208,000 | |
Accrued payable | 101,000 | |
Total current liabilities | 497,000 | |
Common stock | 360,000 | |
Retained earnings | 467,400 | |
Total stockholders equity | 827,400 | |
Total liabilities and stockholders' equity | 1,324,400 | |
Notes:
PC Inc | ||
Statement of Owners' Equity | ||
For the Year Ended December 31, Year 2 | ||
Particulars | Amount | Amount |
Beginning Balance | $514,600 | |
Deduct: Net loss | ($19,200) | |
Deduct: Dividends | ($28,000) | ($47,200) |
Ending Balance | $467,400 |
Compute ending inventory units as follows | ||
Ending inventory | $300,000 | |
Total production cost last year | $1,500,000 | |
Number of units produced and sold | 250,000 | |
Cost per unit | $6.00 | |
Number of units in ending inventory in Year 1 | 50,000 | |
Added during the year (400,000 − 350,000) | 50,000 | |
Total units of ending inventory in Year 2 | 100,000 | |
Compute cost of ending inventory as follows | ||
Manufacturing costs | $2,360,000 | |
÷ Units Manufactured | 400,000 | |
Cost per unit | $5.90 | |
× Number of units in ending inventory | 100,000 | |
Cost of ending inventory | $590,000 | |
Compute income tax as follows | ||
Total revenues | $2,532,000 | |
Cost of goods sold | $2,070,000 | |
Selling costs | $364,000 | |
Administrative costs | $130,000 | |
Total costs | $2,564,000 | |
Tax loss | ($32,000) | |
× Tax rate | 40% | |
Tax benefit | ($12,800) |