Question

Exercise 8-9 Budgeted Balance Sheet [LO8-10]

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year:

	Ending Balances
Cash		?
Accounts receivable	$	8,700
Supplies inventory	$	5,100
Equipment	$	37,000
Accumulated depreciation	$	15,000
Accounts payable	$	2,400
Common stock	$	5,000
Retained earnings		?

The beginning balance of retained earnings was $34,000, net income is budgeted to be $18,700, and dividends are budgeted to be $5,200.

Required:

Prepare the company’s budgeted balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Mecca Copy
Budgeted Statement of Retained Earnings
Beginning retained earnings		34,000
Add: Net Profit	18,700
Less:Dividends	-5,200
		13,500
Retained earnings, Ending		$47,500

Total assets = Total Liabilities + Stockholders equity

Total assets = 2,400+52,500

Total assets = $54,900

Cash + Accounts receivable +Supplies inventory + Equipment- Accumulated depreciation = 54,900

Cash +8,700+5,100+37,000-15,000 = 54,900

Cash = $19,100

Mecca Copy
Budgeted Balance Sheet
Assets		Amount
Current Assets:
Cash	19,100
Accounts receivable	8,700
Supplies inventory	5,100
Total Current Assets		32,900
Plant,Assets :
Equipment	37,000
Less:Accumulated Depreciation	-15,000
Total plant asset		22,000
Total Assets		54,900
Liabilities and Stockholders Equity
Current Liabilities:
Accounts payable	2,400
Total Current liabilities		2,400
Stockholders Equity:
Common stock	5,000
Retained earnings	47,500
Total stockholders equity		52,500
Total Liabilities & Stockholders Equity		54,900