Barrett Company has completed all operating budgets other than the income statement for 2017. 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 2017 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 2017 will not be paid until 2018.

Instructions

(a) Calculate budgeted cost of goods sold.

(b) Prepare a budgeted multiple-step income statement for the year ending December 31, 2017.

(c) Prepare a budgeted classified balance sheet as of December 31, 2017.

Transcribed Image Text:

Current assets Cash Raw materials inventory BARRETT COMPANY Balance Sheet December 31, 2016 Assets Total current assets Property, plant, and equipment Equipment Less: Accumulated depreciation Total assets Liabilities Accounts payable Notes payable $40,000 4,000 Liabilities and Stockholders' Equity Total liabilities Stockholders' equity Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 5,000 22,000 25,000 14,000 $20,000 10,000 30,000 36,000 $66,000 $27,000 39,000 $66,000