Case Study #2

TINS (Thisisnotsiemens) Electronics, Inc. designs and manufactures measurement and computation products and systems used in a variety of organizations. Its principal products are integrated instruments and computer systems, with associated software; test and measurement instruments; medical electronic equipment and systems; and instrumentation and systems for chemical analysis.

As a member of budgeting team, your assignment, Jim, should you decide to accept it, is to prepare the budgeted balance sheet, based on information provided by other member of the team. The actual balance sheet for the end of 2019 follows:

TINS Electronics, Inc.

Balance Sheet

12/31/2019

(In million of dollars)

Current Assets

Cash

$479

Accounts Receivable (Net)

590

Inventories

511

Prepaid Expenses

30

$1,610

Property, Plant, and Equipment

$1,397

Less: accumulated depreciation

462

935

Total Assets

$2,545

Current Liabilities

Accounts Payable

$249

Accrued Income Taxes

132

Other Accrued Liabilities

280

$661

Long-Term Debt

143

Total Liabilities

804

Stockholders' Equity

Common Stock

$356

Retained Earnings

1,385

1,741

Total Liabilities and Equity

$2,545

Dan Briggs, another member of the team, has furnished you with the following budgeted income statement for the current year:

TINS Electronics, Inc.

Budgeted Income Statement

For the year ended December 31, 2020

(In millions of dollars)

Sales Revenue

$3,253

Cost of goods sold

1,583

Gross Profit

$1,670

Operating Expenses

Marketing

$590

General and Administrative

358

Research and Development

343

1,291

Net Income before taxes

$379

Provision for income taxes

134

Net Income after taxes

$245

The controller has also furnished you a number of assumptions, policies, and other information as follows:

1)The company has made arrangements to acquire property, plant, and equipment during the year for $339 million. Long-term debt will finance $18 million and cash will be used for the remainder.

2)All sales are on credit. Collections on credit sales for the year are budgeted for $3,218 million.

3)Several account balances are planned for changes.

a)Inventories will decrease by $15 million.

b)Other accrued liabilities will increase $70 million.

c)Prepaid expenses will increase $10 million.

4)Depreciation expense in the income statement totals $105 million.

5)Payments will be made on accounts payable, $2,682 million; and on accrued income taxes, $179 million.

6)Common stock was sold to employees in a special stock purchase plan for $34 million.

7)Dividends of $29 million will be declared and paid during the year.

Required:

budgeted balance sheet, based on the results of the budget work sheet. Add any schedules needed to summarize the above information. Present your work using Excel spreadsheet (Please be sure that your cells include equation, sums, etc).This document will self-destruct in ... Never mind, nothing will happen to this document. Good luck, Jim.