Question

What are the formulas to calculate the balance sheet items for a master budget?

Answer 1

balance sheet items:-

Cash figure is taken from the cash budget

Accounts receivable figure depends upon the ratio in which sales are collected.

Inventory figure is taken from the purchases budget.

Prepaid expenses are taken net of the expired expenses ( expired expenses figure can be derived from income statement )

Buildings and equipments figure = Opening balance + purchases - sales - accumulated depreciation

Accounts payable figure depends upon the ratio in which payments are made for direct material purchases.

Capital stock figure = Opening balance + issuance - sales

Retained earnings figure = Opening balance + Net income - dividends