Comfort Furniture Pty Ltd manufactures and distributes stylish and practical furniture for hospitality industry in Australia. The company's balance sheet at December 31, 2016 is shown below:

Comfort Furniture Balance Sheet

December 31, 2016

Assets

Current Assets

Cash

$7,500

Accounts receivable

$73,500

Finished goods inventory (1500 units)

$24,000

Total current assets

$105,000

Property, plant and equipment

Equipment

$40,000

Less: Accumulated depreciation

$10,000

$30,000

Total Assets:

$135,000

Liabilities

Notes payable

$25,000

Accounts payable

$45,000

Total Liabilities

$70,000

Stockholders' Equity

Common stock

$40,000

Retained earnings

$25,000

Total stockholders' equity

$65,000

Total liabilities and stockholders'

equity

$135,000

Budgeted data for the year 2017 includes the following:

2017

Quarter 4

Total

Sales budget (8,000 units at $32)

$76,800

$256,000

Direct materials used

17,000

62,500

Direct labour

12,500

50,900

Manufacturing overhead applied

10,000

48,600

Selling and administrative expenses

18,000

75,000

Additional Information:

To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. The company uses the first-in, first

out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes, in 2017, the company expects to declare and pay $8,000 cash dividends.

The company's cash budget shows and expected cash balance of $5,880 at December 31, 2017. 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 and 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 2017, the company expects to purchase additional equipment costing $9,000. $4,000 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses.

The company expects to pay $8,000 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31,2017, includes amounts due suppliers (see above) plus other accounts payable of $7,200. Unpaid income taxes at December 31 will be

$5,000.

Required:

Prepare the following for 2017:

1)Budgeted statement of cost of goods sold (15 marks)

2)Budgeted multiple-step income statement (25 marks)

3)Retained earnings statement for 2017 (15 marks)

4)Budgeted classified balance sheet at December 31,2017 (25 marks)

5)Proof of budgeted cash balance at December 31, 2017 (20 marks)