14 CHAPTER 9 Budgetary Planning The company's cash budget shows an expected cash balance of #5,880,000 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 ad- ditional equipment costing W9,000,000. #4,000,000 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 #8,000,000 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense #3,500,000, above). Accounts paya- ble at December 31, 2020, includes amounts due suppliers (see above) plus other accounts payable of #7,200,000. 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. Net income W21,900,000 Total assets W116,600,000 14 CHAPTER 9 Budgetary Planning The company's cash budget shows an expected cash balance of #5,880,000 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 ad- ditional equipment costing W9,000,000. #4,000,000 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 #8,000,000 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense #3,500,000, above). Accounts paya- ble at December 31, 2020, includes amounts due suppliers (see above) plus other accounts payable of #7,200,000. 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. Net income W21,900,000 Total assets W116,600,000