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.