Chapter 22, Problem 49BP

Preparing a financial budget—budgeted income statement and balance sheet

Ballentine Company has the following post-closing trial balance on December 31, 2018:

The company’s accounting department has gathered the following budgeting information for the first quarter of 2019:

Additional information:

1. a. Direct materials purchases are paid 50% in the quarter purchased and 50% in the next quarter.
2. b. Direct labor, ma following budgeted income statement manufacturing overhead, selling and administrative costs, and income tax expense are paid in the quarter incurred.
3. c. Accounts payable at December 31, 2018 are paid in the first quarter of 2019.

Requirements

1. 1. Prepare Ballentine Company’s budgeted income statement for the first quarter of 2019.
2. 2. Prepare Ballentine Company’s budgeted balance sheet as of March 31, 2019.