Question

For the budget period ending December 31 of the current year, Aaron Corporation estimates its ending balances for cash as $4,000, accounts receivable as $16,000, finished goods inventory as $12,000, and raw materials inventory as $8,000. Invoices relating to raw materials in the amount of $14,000 are expected to be unpaid as of December 31. What is the amount of total current assets that will be reported on the budgeted balance sheet? $20,000 $26,000 $32,000 $40,000 Knowledge Check 02 Film Studio, Inc. has beginning retained earnings of $80,000 and expects to earn net income of $70,000 during the budget period. What would be the budgeted ending balance in retained earnings if the company pays dividends of $50,000? $80,000 $100,000 $150,000 $200,000

Answer 1

Answer:

total current assets = $40,000

Ending Retained earning = $100,000

Explanation:

1. The computation of total current assets is shown below

Total current assets = Cash + Accounts receivable + Finished goods inventory + Raw material inventory

Total current assets = $4,000 + $16,000 + $12,000 + $8,000

= $40,000

2. The computation of ending retained earning

Beginning retained earnings = $80,000

Add: Net Income = $70,000

Less: Dividend = -$50,000

Ending Retained earning = $100,000