In: Accounting
ABC INC, announces the following accounts and balances on 12/31/17:
Cash $15,000
Equipment (net) 20,000
Inventory 85,000
Retained Earnings 30,000
Common Stock 90,000
During the first quarter [January _ March] of 2018 the business gauges they will sell 150 units of an item at a cost of $200 per unit. All units are sold on account. The business estimates the account receivable balance will be 15% of the sales revenue for the quarter. The business plans to buy 120 units of an item at a cost of $125 per unit during the quarter. They estimate the account payable balance will be 25% of the budgeted quarterly purchases at the end of the quarter. The business estimates selling & general/administrative expenses of $9,000 for the quarter ($500 of this amount is for depreciation expense).
Prepare a budgeted income statement for the first quarter of 2018 and a budgeted balance sheet as of 3/31/18.
Balance sheet as on 31.12.2017 | |||
Assets | $ | Liabilities | $ |
Cash | 15000 | Retained Earnings | 30000 |
Equipment | 20000 | Common stock | 90000 |
Inventory | 85000 | ||
120000 | 120000 |
Income statement for the period 01.01.2018 - 31.03.2018 | |||
Units | selling price | Value | |
Sales | 150 | 200 | 30000 |
Opening stock | 85000 | ||
Purchase | 120 | 125 | 15000 |
Closing stock | 70000 | ||
Cost of Goods sold | 30000 | ||
Depreciation | 500 | ||
Selling & Admin(except dep) | 8500 | ||
Total cost | 39000 | ||
Net Margin | -9000 | ||
Balance sheet as on 31.03.2018 | |||
Assets | $ | Liabilities | $ |
Cash | 20750 | Retained Earnings | 30000 |
Accounts receivable | 4500 | Add margin during the Quarter | -9000 |
Equipment $ 20000 | Net retained earnings | 21000 | |
Less :Depreciation $500 | 19500 | Accounts payable | 3750 |
Inventory | 70000 | Common stock | 90000 |
114750 | 114750 | ||
Working: | |||
Account receivable balance | 4500 | ||
30000*15% | |||
Account payable balance | 3750 | ||
15000*25% | |||
Cash | 15000 | ||
ADD:cash received during the Quarter | 25500 | ||
30000*85% | |||
Less:Cash Paid during the Quarter | 11250 | ||
15000*75% | |||
Less: Selling & Distribution exp | 8500 | ||
Cash in Hand on 31.03.2018 | 20750 | ||
Inventory | |||
Opening | 85000 | ||
Add Purchase | 15000 | ||
Less sales | 30000 | ||
Closing Inventory | 70000 |