Help me solve (c.)
Krause Industries' balance sheet at December 31, 2019, is presented below. KRAUSE INDUSTRIES Balance Sheet December 31, 2019 Assets Current Assets Cash $7,500 Accounts receivable 73,500 Finished goods inventory (1,500 units) 26,850 Total current assets 107,850 Property, Plant, and Equipment Equipment $40,690 Less: Accumulated depreciation 10,530 30,160 Total assets $138,010 Liabilities and Stockholders' Equity Liabilities Notes payable $27,650 Accounts payable 45,260 Total liabilities 72,910 Stockholders' Equity Common stock $37,860 Retained earnings 27,240 Total stockholders' equity 65,100 Total liabilities and stockholders' equity $138,010 Budgeted data for the year 2020 include the following. 2020 Quarter 4 Total Sales budget (8,000 units at $32) $76,800 $256,000 Direct materials used 13,990 62,500 Direct labor 12,500 50,900Liabilities and Stoddiolders' Equity Liabilities Notes payable $27,650 Accounts payable 45,260 Total liabilities 72,910 Stockholders' Equity Common stock $37,860 Retained earnings 27,240 Total stockholders' equity 65,100 Total liabilities and stockholders' equity $138,010 Budgeted data for the year 2020 include the following. 2020 Quarter 4 Total Sales budget (8,000 units at $32) $76,800 $256,000 Direct materials used 13,990 62,500 Direct labor 12,500 50,900 Manufacturing overhead applied 10,000 48,600 Selling and administrative expenses 16,380 75,000 To meet sales requirements and to have 2,500 units of nished 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 $18. Krause uses the rst-in, rst-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 2020, the company expects to declare and pay an $8,360 cash dividend. The company's cash budget shows an expected cash balance of $5,880 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 $10,500. $5,085 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Krause expects to pay $8,470 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, 2020, includes amounts due suppliers (see above) plus other accounts payable relating to manufacturing overhead of $8,320. Unpaid income taxes at December 31 will be $5,750. V (C) Your answer is partially correct. Try again. Prepare a retained earnings statement for 2020. (List items that increase retained earnings first.) KRAUSE INDUSTRIES Budgeted Retained Earnings Statement I For the Year Ending December 31, 2020 H i Retained Earnings, 1/1/20 :i ' l Net Income] (Loss) 3| a E :i ' l Dividends :i v I: i Retained Earnings, 12/31/20 i $_| l .. E E In In 0
