Question

Bassani, Inc. has the following balance sheet at December 31, 2018 EEB (Click the icon to view the balance sheet.) Bassani projects the following transactions for 2019 (Click the icon to view the transactions.) Prepare a budgeted balance sheet for Bassani, Inc. for December 31, 2019. (Hint: It may be helpful to trace the effects of each transaction on the accounting equation to determine the ending balance of each account.) Begin by completing the accounting equation for the 2019 transactions. (Use a minus sign or parentheses to enter account reductions and contra asset balances and activity If a box is not used in the equation leave the box empty; do not enter a zero Cash A/R + RM Inv. + FG Inv. + Equip. (A/D) A/P + CS + RE + + Dec. 31, 2018 Sales on acct. Cash recpts Purch. RM Pmts on acct. RM used Direct labor Mfg. OH Bassani, Inc. Balance Sheet December 31, 2018 Assets Current Assets: 3,000 600 900 1,750 Cash Accounts Receivable Raw Materials Inventory Finished Goods Inventory Total Current Assets 6,250 Property, Plant, and Equipment: 8,000 Equipment (1,000) 7,000 Less: Accumulated Depreciation Property, Plant, and Equipment: 8,000 (1,000) Equipment 7,000 Less: Accumulated Depreciation $ 13,250 Total Assets Liabilities Current Liabilities Accounts Payable $ 1,900 Stockholders' Equity Common Stock, no par 8,000 3,350 Retained Earnings 11,350 Total Stockholders' Equity $ 13,250 Total Liabilities and Stockholders' Equity Sales on account, $26,000 Cash receipts from customers from sales on account, $20,200 Purchase of raw materials on account, $9,000 Payments on account, $4,400 Total cost of completed products, $15,600, which includes the following: Raw materials used, $6,700 Direct labor costs incurred and paid, $4,900 Manufacturing overhead costs incurred and paid, $3,600 Depreciation on manufacturing equipment, $400 Cost of goods sold, $15,200 Selling and administrative costs incurred and paid, $6,000 Purchase of equipment, paid in 2019, $2,200

Answer 1

Cash A/R RM. Inv FG. Inv Equip.(A/D) A/P CSRE Transactions $3,000+ $600+ $900 + $1,750 + $8,000 + ($1,000)= $1,900 + $8,000 + $3,350 Dec 31, 2018 As per Balance sheet given respective balances posted +$26,000 t + $26,000 Sales on Account As sales are on account, Increase Account receivables&Sales are effect on Income statement. So, Increased Retained Earnings. $20,200 ($20,200) + Cash receipts As Cash received Increase Cash. But Cash collected from Account Receivable. So, Account receivables decreased +$9,000 + -$9,000 + Purchase Raw Material As Purchase of Raw material will increase Raw Material Inventory. As Purchases are on account increases Accounts payable ($4,400) + As cash paid decreases the cash. And It is on account payment it will decreases Accounts payable ($4,400) + Payments on Account ($6,700)$6,700 RM Used As Raw material converted to complete unit. So, The Raw material transferred from Raw Material inventory to Finished Good Inventory So, Raw Material Inventory decreased and Finished Goods Inventory Increased Direct Labor As Cash paid, Cash is decreased. As cash paid to Direct Labor which is utilised for finished goods, Finished Goods Inventory increased ($4,900)+ + $4,900 + ($3,600) + +$3,600 + Manufacturing Overhead As Cash paid, Cash is decreased. As cash paid to Manufacturing overhead which is utilised for finished goods, Finished Goods Inventory increased. Depreciation As Depreciation is charged to Finished goods inventory, Finished goods inventory increased. As it is Depreciation, Accumulated depreciation will increase in adverse +$400 + +($400)- ($15,200) + Cost of gods sold Out of finished goods inventory, Cost of Goods sold Decreased from both Finished goods inventory & It effects on income as it is expense. So, it decreased Retained earnings + ($15,200) Selling and administrative expenses ($6,000)+ As cash paid, Cash is decreased. As Cash paid for Selling and administrative expenses it will effects on Net income & it is expense. So, It decreased Retained earnings. +($6,000) Purchase of equipment As cash paid, Cash decreased. As Cash paid for equipment, Equipment value increased ($2,200) + $2,200 + $2,100 $6,400 $3,200 $2,150 $10,200 ($1,400) = $6,500 $8,000 $8,150 Total

Bassani, Inc. Balance Sheet December 31, 2019 Assets Current Assets: $2,100 $6,400 $3,200 $2,150 Cash Accounts Receivable Raw Material Inventory Finished Goods Inventory Total Current Assets $13,850 Property, Plant and Equipment $10,200 Equipment Less: Accumulated Depreciation ($1,400) $8,800 $22,650 Total Assets Liabilities Current Liabilities: $6,500 Accounts Payable Stockholders' Equity $8,000 $8,150 Common stock, no par Retained earnings $16,150 Total Stockholders' Equity $22,650 Total Liabilities and Stockholders' Equity