Question

2) XYZ Company has provided balance sheet information for the year just ended, August 31, 2016:

Cash                                                                                      $40,000

Accounts receivable                                                            50,000

Building                                                                                100,000

Accumulated depreciation                                           (40,000)

Total assets                                                                        $150,000

               

Accounts payable                                                             $30,000

Long-Term Loan                                                                    70,000

Total liabilities                                                                   100,000

Shareholders' Equity                                                           50,000

Total Liabilities & Shareholders' Equity                   $150,000

The company has also provided the following information for the upcoming year:

Revenue is expected to be $200,000 and net income is expected to be $40,000.

The company will pay $30,000 of cash dividends in the upcoming year.

Accounts receivable from the previous year will all be collected in the current year.

35% of revenue will remain uncollected at the end of the year.

100% of accounts payable owing at August 31, 2016 will be paid in the current year.

The company will owe $15,000 to suppliers at August 31, 2017.

The company will make the required principal payment of 10,000 on the bank loan during the year.

The company expects to have a cash balance of $30,000 at the end of the year.

Yearly depreciation expense of the building is $15,000.

Required: Prepare a budgeted balance sheet for the upcoming year.

my answer:

Assets
Cash	30000
Accounts Receivables	70000
Building	100000
Accumulated Depreciation	-55000
	145000
Liabilities
Accounts Payable	15000
Long Term Loan	60000
Total Liabilities	75000
Share holders' Equity	60000
Total liabilites & shareholders' equity	135000

$10000 is differing. Can't understand why? Do I have to calculate cash balance?

Thank YOu

Answer 1

Assets	Amount in $
Cash ( As per working )	20,000
Accounts Receivables ( 70,000 + 200,000 - 70,000 - (200,000 x 35% ) )	70,000
Building	100,000
Accumulated Depreciation ( 40,000 + 15,000 )	-55,000
Total Assets	135,000
Liabilities
Accounts Payable	15,000
Long Term Loan ( 70,000 - 10,000 )	60,000
Total Liabilities	75,000
Share holders' Equity ( 50,000 + 40,000 - 30,000 )	60,000
Total liabilites & shareholders' equity	135,000
Working:	Amount in $
Opening cash balance	40,000
Add: Collection from accounts receivable	180,000
( 50,000 + ( 200,000 x 65% ) )
Less: Payment to accounts payable	160,000
( 30,000 + ( 145,000 - 15,000 ) )
Less: long term loan repayment	10,000
Less: Dividend paid	30,000
Ending cash balance	20,000
Amount of Purchases/Expenses	Amount in $
Revenue	200,000
Less: Depreciation Expense	15,000
Less: Net Income	40,000
Purchase/Expense	145,000