Sheet1

Answer 1. Budgeted statement of cost of goods sold
Comfort Furniture
Budgeted cost of goods sold
for the year ending December 31, 2017
Finished goods inventory, 1/1/17 24000
Cost of goods manufactured
Direct Material used 62500
Direct Labor 50900
Manufacturing Overhead Applied 48600 162000
Cost of goods available for sale 186000
Less: Finished goods inventory, 31/12/17 (2500 units @ $18) 45000
Cost of goods sold 141000
Answer 2. Budgeted multiple-step income statement
Comfort Furniture
Budgeted income statement
For the year ending December 31, 2017
Sales Revenue 256000
Less: COGS 141000
Gross Profit 115000
Less: Selling and Admin Expenses 75000
Income from operations 40000
Less: Interest Expense 3500
Income before taxes 36500
Less: Tax @ 40% 14600
Net income 21900
Answer 3.Retained earnings statement for 2017
Comfort Furniture
Budgeted Retained Earning Statement
For the year ending on December 31, 2017
Retained Earnings, 1/1/17 25000
Add: Net income 21900
46900
Less: Dividends 8000
Retained Earnings 31/12/2017 38900
Answer 4. Budgeted classified balance sheet at December 31,2017
Comfort Furniture PTY Ltd
Balance Sheet as on 31st December, 2017
Assets
Current Assets
Cash 5880
Accounts receivable 30720
Finished goods inventory (1500 units) 45000
Total current assets 81600
Property, plant and equipment
Equipment 49000
Less: Accumulated depreciation 14000
Total Property, plant and equipment 35,000
Total Assets 116,600
Total liabilities and stockholders’ equity
Liabilities
Notes payable 17000
Accounts payable 15700
Total Liabilities 5000 37700
Stockholders’ Equity
Common stock 40000
Retained earnings 38900
Total stockholders’ equity 78900
Total liabilities and stockholders’ equity 116,600
Answer 5. Budgeted classified balance sheet at December 31,2017
Comfort Furniture PTY Ltd
Statement of budgeted cash balance
Amounts
Opening Cash Balance 7500
Add: Cash collected from receivables 298780
Less: Cash paid for direct meterial 91800
Less: Equipment Purchase 9000
Less: Dividend 8000
Less: Notes payable paid 8000
Less: Interest payment 3500
Less: Taxes paid 9600
Less: Direct Labor 50900
Less: Selling and administrative expenses (Less of depreciation included) 73000
Less: Manufacturing overheads (Less of depreciation included) 46600
Closing balance of cash 5,880
Notes
Cash collected from receivables = Opening balance of accounts receivable + sales made- closing balance of AR
73500+256000-(76800*40%)
298780
Cash paid to direct meterial= Opening balance of AP + Direct meterial- closing balance of AP
45000+62500-(7200+(17000*50%))
91800
Answer 2 (a).primary benefits of budgeting
1. Budgeting helps in guide the administration identifying with its future planning and formulation of policies.
2. Through budgeting substance can control its money related issues effectively.
3. Budgeting spares the pressure of all of a sudden changing in accordance with lack of funds since you didn’t at first arrangement how to spend them.
4. Budgeting is utilized to assess the strategies and objectives of an organization. Additionally, such approaches and objectives are tried with the assistance of budgetary control.
5. Budgeting helps in coordinating both capital and revenue resources in a profitable way.
6. If an organization has limited liquid assets available to put resources into fixed assets and working capital and the budgeting procedure forces the management to choose which resources are most worth putting resources into.
7. At the point when the organization make budget and take a “major picture” view, it will see potential cash issues ahead of time, and have the option to make modifications before the issue shows up.
8. Taking loan isn’t really a terrible thing if the loan is fundamental or organization can manage the cost of it. Budgeting demonstrates how much an loan load organization can reasonably take without being pushed or if taking the loan burden is justified, despite all the trouble.
9. Budgeting, helps to recognizes and take out unnecessary spending like late charges, punishments and interests. These apparently little sparing can include after some time.

Sheet2

Comfort Furniture PTY Ltd
Balance Sheet as on 31st December, 2017
Assets
Current Assets
Cash 5880
Accounts receivable 30720
Finished goods inventory (1500 units) 45000
Total current assets 81600
Property, plant and equipment
Equipment 49000
Less: Accumulated depreciation 14000
Total Property, plant and equipment 35,000
Total Assets 116,600
Total liabilities and stockholders’ equity
Liabilities
Notes payable 17000
Accounts payable 15700
Total Liabilities 5000 37700
Stockholders’ Equity
Common stock 40000
Retained earnings 38900
Total stockholders’ equity 78900
Total liabilities and stockholders’ equity 116,600
Comfort Furniture PTY Ltd
Statement of budgeted cash balance
Amounts
Opening Cash Balance 7500
Add: Cash collected from receivables 298780
Less: Cash paid for direct meterial 91800
Less: Equipment Purchase 9000
Less: Dividend 8000
Less: Notes payable paid 8000
Less: Interest payment 3500
Less: Taxes paid 9600
Less: Direct Labor 50900
Less: Selling and administrative expenses (Less of depreciation included) 73000
Less: Manufacturing overheads (Less of depreciation included) 46600
Closing balance of cash 5,880
Notes
Cash collected from receivables = Opening balance of accounts receivable + sales made- closing balance of AR
298780
Cash paid to direct meterial= Opening balance of AP + Direct meterial- closing balance of AP
91800
2
Prepared the budgeted balance sheet and explained the benefits of budgeting
Comfort Furniture Pty Ltd
Balance Sheet
For the year ending December 31, 2017
Assets
Current Assets
Cash 5880
Accounts receivable ($76,800 x 40%) 30720
Finished goods inventory (2,500 units x $18) 45000
Total current assets 81600
Property, plant and equipment
Equipment (40000+9000) 49000
Less: Accumulated depreciation (10000+4000) 14000
Total Property, plant and equipment 35000
Total Assets 116600
Total liabilities and stockholders’ equity
Liabilities
Notes payable ($25,000-$8,000) 17000
Income Tax Payable 5000
Accounts payable 7200
Total liabilities 29200
Stockholders’ Equity
Common stock 40000
Retained earnings 47400
Total stockholders’ equity 87400
Total liabilities and stockholders’ equity 116600
Comfort Furniture Pty Ltd
Income Statement
For the year ending December 31, 2017
Sales budget (32,000 units at $32) 256000 256000
Cost of goods manufactured
Direct Material used 62500
Direct Labor 50900
Manufacturing Overhead Applied 48600
Selling and administrative expenses 75000
237000
Income before interest and taxes 19000
Less: Interest Expense 3500
Income before taxes 15500
Less income tax $15500 x 40% 6200
Income after taxes 9300

Sheet3

Comfort Furniture
Budgeted cost of goods sold
for the year ending December 31, 2017
Finished goods inventory, 1/1/17 24000
Cost of goods manufactured
Direct Material used 62500
Direct Labor 50900
Manufacturing Overhead Applied 48600 162000
Cost of goods available for sale 186000
Less: Finished goods inventory, 31/12/17 (2500 units @ $18) 45000
Cost of goods sold 141000
Comfort Furniture
Budgeted income statement
For the year ending December 31, 2017
Sales Revenue 256000
Less: COGS 141000
Gross Profit 115000
Less: Selling and Admin Expenses 75000
Income from operations 40000
Less: Interest Expense 3500
Income before taxes 36500
Less: Tax @ 40% 14600
Net income 21900
Comfort Furniture
Budgeted Retained Earning Statement
For the year ending on December 31, 2017
Retained Earnings, 1/1/17 25000
Add: Net income 21900
46900
Less: Dividends 8000
Retained Earnings 31/12/2017 38900
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