Barrett Company has completed all operating budgets other than the income statement for 2014. Selected data from these budgets follow.
Sales: $300,000 Purchases of raw materials: $145,000 Ending inventory of raw materials: $15,000 Direct labor: $40,000 Manufacturing overhead: $73,000, including $3,000 of depreciation expense Selling and administrative expenses: $36,000 including depreciation expense of $1,000 Interest expense: $1,000 Principal payment on note: $2,000 Dividends declared: $2,000 Income tax rate: 30%
Other information:
Assume that the number of units produced equals the number sold.
Year-end accounts receivable: 4% of 2014 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 2014 will not be paid until 2015.

Instructions

(a) Calculate budgeted cost of goods sold.

(b) Prepare a budgeted income statement for the year ending December 31, 2014.

(c) Prepare a budgeted balance sheet as of December 31, 2014.

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Cash Raw materials inventory Barrett Company Balance Sheet December 31, 2013 Assets Equipment Less: Accumulated depreciation Total assets Accounts payable Notes payable Total liabilities $40,000 4,000 Liabilities and Stockholders' Equity $ 5,000 22,000 Common stock Retained earnings Total liabilities and stockholders' equity 25,000 14,000 $20,000 10,000 36,000 $66,000 $27,000 39,000 $66,000