Barrett Company has completed all operating budgets other than the income statement for 2010. Selected data from these budgets follow.
Sales: $300,000
Purchases of raw materials: $145,000
Ending inventory of raw materials: $15,000
Direct labor: $40,000
Manufacturing overhead: $73,000, including $3,000 of depreciation expense
Selling and administrative expenses: $36,000 including depreciation expense of $1,000
Interest expense: $1,000
Principal payment on note: $2,000
Dividends declared: $2,000
Income tax rate: 30%
Other information:
Year-end accounts receivable: 4% of 2010 sales
Year-end accounts payable: 50% of ending inventory of raw materials
Interest, direct labor, manufacturing overhead, and selling and administrative expenses other than depreciation are paid as incurred.
Dividends declared and income taxes for 2010 will not be paid until 2011.
BARRETT COMP ANY
Balance Sheet
December 31, 2009
Assets
|
Cash
|
|
$20,000
|
|
Raw materials inventory
|
|
10,000
|
|
Equipment
|
$40,000
|
|
|
Less: Accumulated depreciation
|
4,000
|
36,000
|
|
Total assets
|
|
$66,000
|
Liabilities and Stockholders' Equity
|
Accounts payable
|
$ 5,000
|
|
|
Notes payable
|
22,000
|
|
|
Total liabilities
|
|
$27,000
|
|
Common stock
|
25,000
|
|
|
Retained earnings
|
14,000
|
39,000
|
|
Total liabilities and stockholders' equity
|
|
$66,000
|
Instructions
(a) Calculate budgeted cost of goods sold.
(b) Prepare a budgeted income statement for the year ending December 31, 2010.
(c) Prepare a budgeted balance sheet as of December 31, 2010.