Preparing a financial budget—budgeted income statement and balance sheet
Ballentine Company has the following post-closing trial balance on December 31, 2018:
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The company’s accounting department has gathered the following budgeting information for the first quarter of 2019:
Budgeted total sales, all on account $ 305,500 Budgeted direct materials to be purchased and used 40,000 Budgeted direct labor cost 12,500 Budgeted manufacturing overhead costs: Variable manufacturing overhead 2,600 Depreciation 800 Insurance and property taxes 1,100 Budgeted cost of goods sold 71,300 Budgeted selling and administrative expenses: Salaries expense7,000 Rent expense 3,500 Insurance expense 2,000 Depreciation expense 350 Supplies expense 3,055 Budgeted cash receipts from customers 263,500 Budgeted income tax expense 44,000 Budgeted purchase and payment for capital expenditures
(additional equipment) 34,000
Additional information:
a. Direct materials purchases are paid 50% in the quarter purchased and 50% in the next quarter.
b. Direct labor, ma following budgeted income statement manufacturing overhead, selling and administrative costs, and income tax expense are paid in the quarter incurred.
c. Accounts payable at December 31, 2018 are paid in the first quarter of 2019. Requirements
1. Prepare Ballentine Company’s budgeted income statement for the first quarter of 2019.
2. Prepare Ballentine Company’s budgeted balance sheet as of March 31, 2019.
