ACTG2020_Week8 Ch9_2014

99 gross margin selling and administrative expenses

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Unformatted text preview: get. Sales Ending Finished Ending Finished Goods Inventory. Goods Inventory. Selling and Selling and Selling Selling Administrative Administrative Administrative Administrative Expense Budget. Expense Budget. Cash Budget. Cash Budget. LO 2 The Budgeted Balance Sheet Royal reported the following account balances prior to preparing its budgeted financial statements: • • • • Land – $50,000 Common shares – $200,000 Retained earnings – $146,150 Equipment – $175,000 LO 2 Royal Company Budgeted Balance Sheet June 30 Current assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Property and equipment Land Equipment Total property and equipment Total assets Accounts payable Common shares Retained earnings Total liabilities and equities $ 43,000 75,000 4,600 24,950 147,550 50,000 367,000 417,000 $ 564,550 $ 28,400 200,000 336,150 $ 564,550 25% of June 25% of June sales of sales of sales sales $300,000. $300,000. $300,000. $300,000. 11,500 lbs. 11,500 lbs. 11,500 at $0.40/lb. at $0.40/lb. 5,000 units 5,000 units at $4.99 each. at $4.99 each. 50% of June 50% of June purchases purchases purchases purchases off$56,800. of $56,800. of o LO 2 Royal Company Budgeted Balance Sheet June 30 Current assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Property and equipment Land Equipment Total property and equipment Total assets Accounts payable Common shares Retained earnings Total liabilities and equities $ 43,000 Beginning balance 75,000 Add: net income 4,600 Deduct: dividends 24,950 balance Ending 147,550 $146,150 239,000 (49,000) $336,150 50,000 367,000 417,000 $ 564,550 $ 28,400 200,000 336,150 $ 564,550 LO 2 Static Budgets and Performance Reports Static budgets are prepared for a single, planned level of activity. Hmm! Comparing static budgets with actual costs is like comparing apples and oranges. Performance evaluation is difficult when actual activity differs from the planned level of...
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