Question

The following information is available for Zetrov Company. a. The cash budget for March shows an ending bank loan of $10,000 and an ending cash balance of $50,000. b. The sales budget for March indicates sales of $140,000. Accounts receivable are expected to be 70% of the current-month sales. c. The merchandise purchases budget indicates that $89,000 in merchandise will be purchased on account in March. Purchases on account are paid 100% in the month following the purchase. Ending inventory for March is predicted to be 600 units at a cost of $35 each. d. The budgeted income statement for March shows net income of $48.000. Depreciation expense of $1,000 and $26,000 in income tax expense were used in computing net income for March. Accrued taxes will be paid in April e. The balance sheet for February shows equipment of $84,000 with accumulated depreciation of $46,000, common stock of $25,000, and ending retained earnings of $8,000. There are no changes budgeted in the equipment or common stock accounts. Prepare a budgeted balance sheet at the end of March ZETROV COMPANY Budgeted Balance Sheet As of March 31

Answer 1

Z ETROV COMPANY Budgeted Balance sheet As of March 31 Assets Cash $ 50,000 Accounts receivable # 98,000 Merchandise Inventory $ 21,000 $ 169,000 Total current assets $ 84,000 Equipment Less: Accumulated $ 47,000 depreciation $ 37,000 $206,000 Equipment, net Total assets Accounts payable Bank loan payable Income taxes payable Liabilities $ 89,000 $ 10,000 $ 26,000 $ 125,000 Total liabilities Equity Common stock Retained earnings Total Stockholders' Equity Total liabilities and Equity $ 25,000 $ 56,000 $ 1,000 $ 206,000

Calculation: Accounts receivable = $140,000 x 70% = $ 98,000 Merchandise inventory = 600 units X $35 $ 21,000 Accumulated depreciation = Accumulated depreciau + Depreciation ex pense = $ 46,000 + $1,000 $ 47,000 Retained earnings = Beginning retained earnings + Net income = $ 8,000 + $ 48,000 = $ 56,000 Note: Ending retained considered as earnings of February will be Beginning retained earnings of March.