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    of 4

    UNIVERSITY OF PUERTO RICO AT CAROLINA

    ADMINISTRATION BUSINESS DEPARTMENT

    CONT 4006

    NAME: :___________ DATE:___________ STD. NUM. :___________

    Instructions:
    1. Download the attached document and identify it with your name.
    2. Complete the exercise, save and send it as an attachment in the Ch. 24 Assignment.

    I. Barrett Company has completed all operating budgets other the income statement for 2022.
    Selected data from these budgets follows.

    Sales revenue: $300,000


    Purchases of raw materials: $145,000
    Ending inventory of raw materials: $15,000
    Direct labor: $40,000
    Interest expense: $1,000
    Principal payment on note: $2,000
    Dividends declared: $2,000
    Income tax rate: 30%

    Manufacturing overhead: $73,000, including $3,000 of depreciation expense

    Selling and administrative expenses: $36,000 including depreciation expenses of $1,000

    Other information:

    Assume that the number of units produced equals the number sold.

    Year-end accounts receivable: 4% of 2022 sales.

    Year-end accounts payable: 50% of ending inventory of raw materials.

    Interest, direct labor, manufacturing overhead, and selling and administrative expenses other
    than depreciation are paid as incurred. Dividends declared and income taxes for 2022 will not
    be paid until 2023.
    BARRETT COMPANY
    Balance Sheet
    December 31, 2021
    Assets
    Cash $20,000
    Raw materials inventory $10,000
    Equipment $40,000
    Less: Accumulated depreciation $ 4,000 $36,000
    Total assets $66,000

    Liabilities and Stockholders’ Equity

    Accounts payable $ 5,000


    Notes payable $22,000
    Total liabilities $27,000
    Common stock $25,000
    Retained earnings $14,000 $39,000
    Total liabilities and stockholders’ equity $66,000
    Instructions:
    (a) Calculate budgeted cost of goods sold.
    (b) Prepare a budgeted income statement for the year ending December 31, 2022.
    (c) Prepare a budgeted balance sheet as of December 31, 2022.

    A)
    $
    Direct Materials Used 140,000
    $
    Cost of Goods Sold 253,000
    B)
    Particulars Amount
    Sales $ 300,000
    Less: cost of goods sold $ (253,000)
    Gross Profit $ 47,000
    Less: Expenses
    Selling and administrative $
    expenses 36,000
    $
    Interest Expense 1,000
    Total Expense $ (37,000)
    Income: Before Income Tax
    Expense $ 10,000
    Less: Income Tax 30% $ (3,000)
    Net Income $ 7,000

    Working:
    Income tax Expense= 3000

    C)
    Particulars Amount
    Assets
    Cash $ 17,500
    Account Receivable $ 12,000
    Raw Materials Inventory $ 15,000
    $
    Equipment 40,000
    $
    Less: Accumulated Depreciation (8,000)
    Total Assets $ 32,000

    Liabilities and Stockholdres Equity


    $
    Account Payable 7,500
    $
    Income Tax Payable 3,000
    $
    Divided Payable 2,000
    $
    Notes Payable 20,000
    Total Liabilities $ 32,500
    $
    Common Stock 25,000
    $
    Retained Earnings 19,000
    $ 44,000
    Total Liabilities and Stockholdres Equity $ 76,500

    Working:
    Amount
    Cash
    Beginning Cash Balance $ 20,000
    Add: Collection From Customers $ 288,000
    Total Cash Avalaible $ 308,000
    Less: Disturbisements
    $
    Direct Materials 142,500
    $
    Direct Labor 40,000
    $
    Manufactoring Overhead 70,000
    $
    Selling and Administrative Expense 35,000
    Total Disbursements $ (287,500)
    Excess of Cash Avaliable $ 20,500
    Less: Repayment of Principal Interest' $ 3,000
    Ending Cash Balance $ 17,500

    Amount
    Retained Earnings
    Beginning Retained Earning $ 14,000
    Add: Net Income $ 7,000
    Less: Dividend Declared $ (2,000)
    Ending Retained Earning $ 19,000

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