Question Details

(Solution Download) Problem 21-6A Krause IndustriesAc??c balance sheet at December 31, 2013, is presented below. KRAU


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 21-6A

 

Krause IndustriesAc??c balance sheet at December 31, 2013, is presented

 

below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KRAUSE INDUSTRIES

 

Balance Sheet

 

December 31, 2013

 

 

Assets

 

 

Current Assets

 

 

    Cash

 

 

$7,500

 

 

    Accounts receivable

 

 

82,500

 

 

    Finished goods inventory

 

(2,000  units)

 

 

35,020

 

 

      Total current assets

 

 

$125,020

 

 

Property, Plant, and Equipment

 

 

    Equipment

 

 

$42,510

 

 

    Less: Accumulated depreciation

 

 

12,510

 

 

30,000

 

 

      Total assets

 

 

$155,020

 

 

Liabilities and Stockholders' Equity

 

 

Liabilities

 

 

    Notes payable

 

 

$27,510

 

    Accounts payable

 

47,510

 

 

      Total liabilities

 

 

75,020

 

 

Stockholders' Equity

 

 

    Common stock

 

 

$47,490

 

 

    Retained earnings

 

 

32,510

 

 

      Total stockholders'

 

equity

 

 

80,000

 

 

      Total

 

liabilities and stockholders' equity

 

 

$155,020

 

 


 

Additional information accumulated for the budgeting process is as

 

follows.

 

Budgeted data for the year 2014 include the following.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4th Qtr. of 2014

 

 

Year 2014 Total

 

Sales budget (8,000 units at $35)$84,000$280,000
Direct materials used11,98069,400
Direct labor12,50056,600
Manufacturing overhead applied10,00051,490
Selling and administrative expenses15,49076,000

 


 

To meet sales requirements and to have 3,000 units of finished

 

goods on hand at December 31, 2014, the production budget shows

 

9,000 required units of output. The total unit cost of production

 

is expected to be $20. Krause Industries uses the first-in,

 

first-out (FIFO) inventory costing method. Selling and

 

administrative expenses include $13,066 for depreciation on

 

equipment. Interest expense is expected to be $3,500 for the year.

 

Income taxes are expected to be 40% 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 2014, the company

 

expects to purchase additional equipment costing $21,510. It

 

expects to pay $10,510 on notes payable plus all interest due and

 

payable to December 31 (included in interest expense $3,500,

 

above). Accounts payable at December 31, 2014, include amounts due

 

suppliers (see above) plus other accounts payable of $8,210. In

 

2014, the company expects to declare and pay an $7,510 cash

 

dividend. Unpaid income taxes at December 31 will be $7,510. The

 

companyAc??cs cash budget shows an expected cash balance of $7,950 at

 

December 31, 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepare a budgeted income statement for

 

2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KRAUSE INDUSTRIES

 

Budgeted Income Statement

 

For the Year Ending December 31, 2014

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

$

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

    Cost

 

of Goods Available For Sale    Cost of Goods

 

Manufactured    Cost of Goods

 

Sold    Finished Goods Inventory, December

 

31    Finished Goods Inventory, January

 

1    Gross Profit    Income

 

before Income Taxes    Income from

 

Operations    Income Tax

 

Expense    Interest

 

Expense    Net Income/

 

(Loss)    Sales    Selling

 

and Administrative Expenses    

 

$

 

    Cost

 

of Goods Available For Sale    Cost of Goods

 

Manufactured    Cost of Goods

 

Sold    Finished Goods Inventory, December

 

31    Finished Goods Inventory, January

 

1    Gross Profit    Income

 

before Income Taxes    Income from

 

Operations    Income Tax

 

Expense    Interest

 

Expense    Net Income/

 

(Loss)    Sales    Selling

 

and Administrative Expenses    

 

 

    Cost

 

of Goods Available For Sale    Cost of Goods

 

Manufactured    Cost of Goods

 

Sold    Finished Goods Inventory, December

 

31    Finished Goods Inventory, January

 

1    Gross Profit    Income

 

before Income Taxes    Income from

 

Operations    Income Tax

 

Expense    Interest

 

Expense    Net Income/

 

(Loss)    Sales    Selling

 

and Administrative Expenses    

 

 

    Cost

 

of Goods Available For Sale    Cost of Goods

 

Manufactured    Cost of Goods

 

Sold    Finished Goods Inventory, December

 

31    Finished Goods Inventory, January

 

1    Gross Profit    Income

 

before Income Taxes    Income from

 

Operations    Income Tax

 

Expense    Interest

 

Expense    Net Income/

 

(Loss)    Sales    Selling

 

and Administrative Expenses    

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

 

Cost of

 

Goods Available For SaleCost of Goods ManufacturedCost of Goods

 

SoldFinished Goods Inventory, December 31Finished Goods Inventory,

 

January 1Gross ProfitIncome before Income TaxesIncome from

 

OperationsIncome Tax ExpenseInterest ExpenseNet Income/

 

(Loss)SalesSelling and Administrative Expenses

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LINK TO TEXT

 

LINK TO TEXT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepare a budgeted balance sheet at December 31, 2014.

 

(List assets in order of

 

liquidity.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KRAUSE INDUSTRIES

 

Budgeted Balance Sheet

 

December 31, 2014

 

 

Assets

 

 

Current

 

AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term

 

InvestmentsLong-term LiabilitiesProperty, Plant and

 

EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current

 

AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible

 

AssetsTotal LiabilitiesTotal Liabilities and Stockholders'

 

EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal

 

Property, Plant and EquipmentTotal RevenuesTotal Stockholders'

 

Equity

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

$

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

    Current

 

Assets    Current

 

Liabilities    Expenses    Intangible

 

Assets    Long-term

 

Investments    Long-term

 

Liabilities    Property, Plant and

 

Equipment    Revenues    Stockholders'

 

Equity    Total

 

Assets    Total Current

 

Assets    Total Current

 

Liabilities    Total

 

Expenses    Total Intangible

 

Assets    Total

 

Liabilities    Total Liabilities and

 

Stockholders' Equity    Total Long-term

 

Investments    Total Long-term

 

Liabilities    Total Property, Plant and

 

Equipment    Total

 

Revenues    Total Stockholders'

 

Equity    

 

 

$

 

 

Current

 

AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term

 

InvestmentsLong-term LiabilitiesProperty, Plant and

 

EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current

 

AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible

 

AssetsTotal LiabilitiesTotal Liabilities and Stockholders'

 

EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal

 

Property, Plant and EquipmentTotal RevenuesTotal Stockholders'

 

Equity

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

$

 

 

AddLess:

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

 

 

    Current

 

Assets    Current

 

Liabilities    Expenses    Intangible

 

Assets    Long-term

 

Investments    Long-term

 

Liabilities    Property, Plant and

 

Equipment    Revenues    Stockholders'

 

Equity    Total

 

Assets    Total Current

 

Assets    Total Current

 

Liabilities    Total

 

Expenses    Total Intangible

 

Assets    Total

 

Liabilities    Total Liabilities and

 

Stockholders' Equity    Total Long-term

 

Investments    Total Long-term

 

Liabilities    Total Property, Plant and

 

Equipment    Total

 

Revenues    Total Stockholders'

 

Equity    

 

 

$

 

 

Liabilities and Stockholders' Equity

 

 

Current

 

AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term

 

InvestmentsLong-term LiabilitiesProperty, Plant and

 

EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current

 

AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible

 

AssetsTotal LiabilitiesTotal Liabilities and Stockholders'

 

EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal

 

Property, Plant and EquipmentTotal RevenuesTotal Stockholders'

 

Equity

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

$

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

    Current

 

Assets    Current

 

Liabilities    Expenses    Intangible

 

Assets    Long-term

 

Investments    Long-term

 

Liabilities    Property, Plant and

 

Equipment    Revenues    Stockholders'

 

Equity    Total

 

Assets    Total Current

 

Assets    Total

 

Expenses    Total Intangible

 

Assets    Total

 

Liabilities    Total Liabilities and

 

Stockholders' Equity    Total Long-term

 

Investments    Total Long-term

 

Liabilities    Total Property, Plant and

 

Equipment    Total

 

Revenues    Total Stockholders'

 

Equity    

 

 

$

 

 

Current

 

AssetsCurrent LiabilitiesExpensesIntangible AssetsLong-term

 

InvestmentsLong-term LiabilitiesProperty, Plant and

 

EquipmentRevenuesStockholders' EquityTotal AssetsTotal Current

 

AssetsTotal Current LiabilitiesTotal ExpensesTotal Intangible

 

AssetsTotal LiabilitiesTotal Liabilities and Stockholders'

 

EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal

 

Property, Plant and EquipmentTotal RevenuesTotal Stockholders'

 

Equity

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

$

 

 

    Accounts

 

Payable    Accounts

 

Receivable    Accumulated

 

Depreciation    Cash    Common

 

Stock    Equipment    Finished

 

Goods Inventory    Income Taxes

 

Payable    Notes

 

Payable    Retained

 

Earnings    

 

 

 

 

    Current

 

Assets    Current

 

Liabilities    Expenses    Intangible

 

Assets    Long-term

 

Investments    Long-term

 

Liabilities    Property, Plant and

 

Equipment    Revenues    Stockholders'

 

Equity    Total

 

Assets    Total Current

 

Assets    Total Current

 

Liabilities    Total

 

Expenses    Total Intangible

 

Assets    Total

 

Liabilities    Total Liabilities and

 

Stockholders' Equity    Total Long-term

 

Investments    Total Long-term

 

Liabilities    Total Property, Plant and

 

Equipment    Total

 

Revenues    Total Stockholders'

 

Equity    

 

 

 

 

    Current

 

Assets    Current

 

Liabilities    Expenses    Intangible

 

Assets    Long-term

 

Investments    Long-term

 

Liabilities    Property, Plant and

 

Equipment    Revenues    Stockholders'

 

Equity    Total

 

Assets    Total Current

 

Assets    Total Current

 

Liabilities    Total

 

Expenses    Total Intangible

 

Assets    Total

 

Liabilities    Total Liabilities and

 

Stockholders' Equity    Total Long-term

 

Investments    Total Long-term

 

Liabilities    Total Property, Plant and

 

Equipment    Total

 

Revenues    Total Stockholders'

 

Equity    

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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