Question

The management of Mecca Copy, a photocopying center located on University Avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year: Ending Balances Cash ? Accounts receivable $ 9,900 Supplies inventory $ 4,200 Equipment $ 43,000 Accumulated depreciation $ 17,400 Accounts payable $ 3,600 Common stock $ 5,000 Retained earnings ? The beginning balance of retained earnings was $35,000, net income is budgeted to be $19,300, and dividends are budgeted to be $6,000. Required: Prepare the company’s budgeted balance sheet

Answer 1

Answer:

a. Cash = $17,200

b. Retained earnings = $48,300.

Explanation:

Equipment Net Book Value (NBV) = Cost - Accumulated depreciation = $43,000 - $17,400 = $25,600.

Retained earnings for the year = Net income - dividend = $19,300 - $6,000 = $13,300.

Closing balance of retained earnings = Beginning balance of retained earnings + Retained earnings for the year = $35,000 + $13,300 = $48,300.

The management of Mecca Copy Budgeted Balance Sheet

                                                                                                         $

Fixed Asset                                            

Equipment                                                                                  25,600

Current Assets      

Cash (see calculation below)                                                     17,200

Accounts receivable                                                                    9,900

Supplies inventory                                                                       4,200

Total Assets                                                                                56,900

Equity

Common stock                                                                             5,000

Retained earnings (see calculation above)                            48,300  

Total equity                                                                                 53,300                                                                            

Current Liability

Accounts payable                                                                        3,600

Total equity and liability                                                           56,900

Note:

Cash = 56,900 - $25,600 - 9,900 - 4,200 = $17,200