Chapter 22, Problem 30E

Preparing the financial budget—budgeted balance sheet

Barker, Inc. has the following balance sheet at December 31, 2018:

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Barker projects the following transactions for 2019:

Sales on account, $20,000

Cash receipts from customers from sales on account, $17,600

Purchase of raw-materials on account, $7,000

Payments on account, $3,500

Total cost of completed products, $16,600, which includes the following:

Raw materials used, $7,100

Direct labor costs incurred and paid, $3,900

Manufacturing overhead costs incurred and paid, $4,800

Depreciation on manufacturing equipment, $800

Cost of goods sold, $14,800

Selling and administrative costs incurred and paid, $500

Purchase of equipment, paid in 2019, $2,000

Prepare a budgeted balance sheet for Barker, 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.)