Question

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	$	8,100
Supplies inventory	$	3,200
Equipment	$	34,000
Accumulated depreciation	$	16,000
Accounts payable	$	1,800
Common stock	$	5,000
Retained earnings		?

The beginning balance of retained earnings was $28,000, net income is budgeted to be $11,500, and dividends are budgeted to be $4,800.

Required:

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

Answer 1

Mecca Copy
Budgeted BALANCE SHEET
	$	$
Assets
Current Assets
Cash	12,200.00
Accounts Receivable	8,100.00
Supplies inventory	3,200.00
Total current assets		23,500.00
Property, plant and equipment
Equipment	34,000.00
Less: Accumulated depreciation	(16,000.00)
Plant and equipment, net		18,000.00
Total assets		41,500.00
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		1,800.00
Stockholders’ equity
Common stock	5,000.00
Retained earnings	34,700.00
Total stockholders’ equity		39,700.00
Total liabilities and stockholders’ equity		41,500.00
Explanation
Mecca Copy
Retained Earnings Statement
	$
Beginning Retained earnings	28,000.00
Add: Net income	11,500.00
	39,500.00
Less: Dividends	(4,800.00)
Ending Retained earnings	34,700.00
Calculation of cash
Total liabilities and stockholders’ equity	41,500.00
Less:
Accounts Receivable	(8,100.00)
Supplies inventory	(3,200.00)
Equipment (Net)	(18,000.00)
Cash	12,200.00