Kimje Industries’ statement of financial position at December 31, 2019, is presented below.

To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2020, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be W18,000. Kimje uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be W3,500,000 for the year. Income taxes are expected to be 40% of income before income taxes. In 2020, the company expects to declare and pay an W8,000,000 cash dividend.

The company’s cash budget shows an expected cash balance of W5,880,000 at December 31, 2020. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2020, the company expects to purchase additional
equipment costing W9,000,000. W4,000,000 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Kimje expects to pay W8,000,000 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense W3,500,000, above). Accounts payable at December 31, 2020, includes amounts due suppliers (see above) plus other accounts payable of W7,200,000. Unpaid income taxes at December 31 will be W5,000,000.

Instructions

Prepare a budgeted statement of cost of goods sold, budgeted multiple-step income statement and retained earnings statement for 2020, and a budgeted classified statement of financial position at December 31, 2020.

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Kimje Industries Statement of Financial Position December 31, 2019 (W in thousands) Assets Property, plant, and equipment Equipment Less: Accumulated depreciation W 40,000 10,000 W 30,000 Current assets Finished goods inventory (1,500 units) Accounts receivable 24,000 73,500 Cash 7,500 Total current assets 105,000 #135,000 Total assets Equity and Liabilities Equity Share capital Retained earnings W40,000 25,000 Total equity W 65,000 Liabilities Notes payable Accounts payable 25,000 45,000 Total liabilities 70,000 Total equity and liabilities W135,000 Budgeted data for the year 2020 include the following. 2020 Quarter 4 Total Sales budget (8,000 units at W32,000) W76,800,000 17,000,000 W256,000,000 62,500,000 Direct materials used Direct labor Manufacturing overhead applied Selling and administrative expenses 12,500,000 10,000,000 18,000,000 50,900,000 48,600,000 75,000,000