Budgeted Balance Sheet

Budgeted Balance Sheet:

Definition and Explanation:

The budgeted balance sheet is developed by beginning with the current balance sheet and adjusting it for the data contained in other budgets.

Example | Sample of Budgeted Balance Sheet:

Following is the budgeted balance sheet of Hampton Freeze Inc. Some of the data on the budgeted balance sheet have been taken from the company’s previous end-of-year balance sheet for 2008 which appears below the budgeted balance sheet for 2009.

Hampton Freeze Inc.
Budgeted Balance Sheet
December 31, 2009

Assets

Current assets:
Cash 1 $47,500
Accounts receivable 2 120,000
Raw materials inventory 3 4,500
Finished goods inventory 4 39,000
————-
Total current assets $211,000
Plant and equipment:
Land 5 80,000
Building and equipment 6 830,000
Accumulated depreciation 7 (392,000)
————–
Plant and equipment, net $518,000
————–
Total assets $729,000
=======

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable (raw materials) 8 $27,000
Stockholders’ equity:
Common stock, no par 9 $175,000
Retained earnings 10 526,000
————–
Total stock holders’ equity 701,100
————–
Total liabilities and stockholders equity $729,000
=======

 

Hampton Freeze, Inc.
Balance Sheet
December 31, 2008

Assets

Current Assets:
Cash $42,500
Accounts receivable 90,000
Raw materials inventory (21,000 pounds) 4,200
Finished goods inventory (2,000 cases) 26,000
————-
Total current assets $162,700
Plant and Equipment:
Land 80,000
Building and equipment 700,000
Accumulated depreciation (292,000)
————-
Plant and equipment, net $488,000
————-
Total assets $650,700

Liabilities and Stockholders’ Equity

Current Liabilities:
Accounts payable (raw materials) $25,800
Stockholders’ Equity:
Common stock, no par $175,000
Retained earnings 449,900
————-
Total stock holders’ equity 624,000
————-
Total liabilities and stockholders’ equity $650,700
=======

Explanation of December 31, 2009, budgeted balance sheet figures:

  1. The ending cash balance, as projected by the cash budget on cash budget page.
  2. Thirty percent of fourth quarter sales, from sales budget ($400,000 × 30% = $120,000)
  3. From direct materials budget, ending raw materials inventory will be 22,500 pounds. This material costs $0.20 per pound. Therefore, the ending inventory in dollars will be 22,500 pounds × $0.20 = $4,500.
  4. From ending finished goods inventory budget.
  5. From December 2008 balance sheet (no change).
  6. The December 2008 balance sheet indicated a balance of $700,000. During 2009, $130,000 of additional equipment will be purchased (see cash budget), bringing the December 31, 2009, balance to $830,000.
  7. The December 31, 2008 balance sheet indicated a balance of $292,000. During 2009, $100,000 depreciation will be taken ($60,000 from manufacturing overhead budget, and $40,000 selling and administrative expense budget), bringing the December 2009, balance to $392,000.
  8. One half of the fourth quarter raw materials purchase, from direct materials budget.
  9. From the December 2008 balance sheet (no change).

10.

December 31, 2008, balance $449,900
Add net income, from budgeted income statement 108,200
——-
558,100
Deduct dividend paid from cash budget 32,000
——-
December 31, 2009, balance $526,100
======

 

You may also be interested in other articles from “Budgeting and planning” chapter:

  1. Profit Planning
  2. Participative or Self Imposed budgeting
  3. Human Factors in Budgeting
  4. Zero Based Budgeting (ZBB)
  5. Budget Committee
  6. Master Budget
  7. Sales Budget
  8. Production Budget
  9. Inventory Purchases Budget for a Merchandising Firm
  10. Material Budgeting | Direct Materials Budget
  11. Labor Budget
  12. Manufacturing Overhead Budget
  13. Ending Finished Goods Inventory Budget
  14. Selling and Administrative Expense Budget
  15. Cash Budget
  16. Budgeted Income Statement
  17. Budgeted Balance Sheet
  18. International Aspects of Budgeting

Other Related Accounting Articles:

Recommended Books !



Or

Download E accounting book in MS-word format for just 20 $ - Click here to Download


Leave a Reply

Your email address will not be published. Required fields are marked *