Krause Industries’ balance sheet at December 31, 2013, is presented below. KRAUS

Krause Industries’ balance sheet at December 31, 2013, is presented below.
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2013
Assets
Current Assets
Cash
$7,500
Accounts receivable
82,500
Finished goods inventory (2,000  units)
34,960
Total current assets
$124,960
Property, Plant, and Equipment
Equipment
$42,480
Less: Accumulated depreciation
12,480
30,000
Total assets
$154,960
Liabilities and Stockholders’ Equity
Liabilities
Notes payable
$27,480
Accounts payable
47,480
Total liabilities
74,960
Stockholders’ Equity
Common stock
$47,520
Retained earnings
32,480
Total stockholders’ equity
80,000
Total liabilities and stockholders’ equity
$154,960
Additional information accumulated for the budgeting process is as follows.
Budgeted data for the year 2014 include the following.
4th Qtr. of 2014
Year 2014 Total
Sales budget (8,000 units at $35)
$84,000
$280,000
Direct materials used
12,040
69,400
Direct labor
12,500
56,600
Manufacturing overhead applied
10,000
51,520
Selling and administrative expenses
15,520
76,000
To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2014, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $20. Krause Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $13,018 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes.
All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2014, the company expects to purchase additional equipment costing $21,480. It expects to pay $10,480 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2014, include amounts due suppliers (see above) plus other accounts payable of $8,180. In 2014, the company expects to declare and pay an $7,480 cash dividend. Unpaid income taxes at December 31 will be $7,480. The company’s cash budget shows an expected cash balance of $7,950 at December 31, 2014.
(a)
Your answer is correct.
Prepare a budgeted income statement for 2014.
KRAUSE INDUSTRIES
Budgeted Income Statement
For the Year Ending December 31, 2014
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
$
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For Sale    Cost of Goods Manufactured    Cost of Goods Sold    Finished Goods Inventory, December 31    Finished Goods Inventory, January 1    Gross Profit    Income before Income Taxes    Income from Operations    Income Tax Expense    Interest Expense    Net Income/ (Loss)    Sales    Selling and Administrative Expenses
$
Cost of Goods Available For Sale    Cost of Goods Manufactured    Cost of Goods Sold    Finished Goods Inventory, December 31    Finished Goods Inventory, January 1    Gross Profit    Income before Income Taxes    Income from Operations    Income Tax Expense    Interest Expense    Net Income/ (Loss)    Sales    Selling and Administrative Expenses
Cost of Goods Available For Sale    Cost of Goods Manufactured    Cost of Goods Sold    Finished Goods Inventory, December 31    Finished Goods Inventory, January 1    Gross Profit    Income before Income Taxes    Income from Operations    Income Tax Expense    Interest Expense    Net Income/ (Loss)    Sales    Selling and Administrative Expenses
Cost of Goods Available For Sale    Cost of Goods Manufactured    Cost of Goods Sold    Finished Goods Inventory, December 31    Finished Goods Inventory, January 1    Gross Profit    Income before Income Taxes    Income from Operations    Income Tax Expense    Interest Expense    Net Income/ (Loss)    Sales    Selling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
Cost of Goods Available For SaleCost of Goods ManufacturedCost of Goods SoldFinished Goods Inventory, December 31Finished Goods Inventory, January 1Gross ProfitIncome before Income TaxesIncome from OperationsIncome Tax ExpenseInterest ExpenseNet Income/ (Loss)SalesSelling and Administrative Expenses
$
Click if you would like to Show Work for this question:
Open Show Work
SHOW SOLUTION
SHOW ANSWER
LINK TO TEXT
LINK TO TEXT
Attempts: 2 of 3 used
(b)
Prepare a budgeted balance sheet at December 31, 2014. (List assets in order of liquidity.)
KRAUSE INDUSTRIES
Budgeted Balance Sheet
December 31, 2014
Assets
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
$
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
Accounts Payable    Accounts Receivable    Accumulated Depreciation    Cash    Common Stock    Equipment    Finished Goods Inventory    Income Taxes Payable    Notes Payable    Retained Earnings
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
$
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
$
AddLess: Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
$
Liabilities and Stockholders’ Equity
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
$
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
$
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
$
Accounts PayableAccounts ReceivableAccumulated DepreciationCashCommon StockEquipmentFinished Goods InventoryIncome Taxes PayableNotes PayableRetained Earnings
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
Current AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentRevenuesStockholders’ EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders’ EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal RevenuesTotal Stockholders’ Equity
$

Published

Leave a comment

Your email address will not be published.