ACC 560 Week 6 Assignment
P9-6A Glendo Industries' balance sheet at December 31, 2008, is presented below.
GLENDO INDUSTRIES
Balance Sheet
December 31, 2008
Assets
Current assets
Cash $7,500
Accounts receivable 82,500
Finished goods inventory (2,000 units) 30,000
Total current assets 120,000
Property, plant, and equipment
Equipment $40,000
Less: Accumulated depreciation 10,000 30,000
Total assets $150,000
Liabilities and Stockholders' Equity
Liabilities
Notes payable $25,000
Accounts payable 45,000
Total liabilities 70,000
Stockholders' equity
Common stock $50,000
Retained earnings 30,000
Total stockholders' equity 80,000
Total liabilities and stockholders' equity $150,000
Additional information accumulated for the budgeting process is as follows.
Budgeted data for the year 2009 include the following.
4th Qtr.
of 2009 Year 2009
Total
Sales budget (8,000 units at $35) $84,000 $280,000
Direct materials used 17,000 69,400
Direct labor 12,500 56,600
Manufacturing overhead applied 10,000 54,000
Selling and administrative expenses 18,000 76,000
To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2009, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $20. Glendo Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $4,000 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 30% 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 2009, the company expects to purchase additional equipment costing $19,000. It expects to pay $8,000 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2009, includes amounts due suppliers (see above) plus other accounts payable of $5,700. In 2009, the company expects to declare and pay a $5,000 cash dividend. Unpaid income taxes at December 31 will be $5,000.The company's cash budget shows an expected cash balance of $7,950 at December 31, 2009.
Instructions
Prepare a budgeted income statement for 2009 and a budgeted balance sheet at December 31, 2009. In preparing the income statement, you will need to compute cost of goods manufactured (direct materials + direct labor + manufacturing overhead) and finished goods inventory (December 31, 2009).
Click here for the solution: Glendo Industries' balance sheet at December 31, 2008, is presented below (ACC 560 Week 6)
