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) 26,520 Total current assets 107,520 Property, plant, and Equipment Equipment $ 40,720 Less: Accumulated depreciation 10,550 30.170 Total assets $ 137,690 Liabilities and Stockholders' Equity Liabilities Notes payable $ 25,360 47,390 Accounts payable Total liabilities Stockholders' Equity 72,750 Common stock $ 39,850 Retained earnings 25.090 Total stockholders' equity 64.940 Total llabilities and stockholders equity $137690 Budgeted data for the year 2020 include the following. 2020 Quarter 4 Total $ 76,800 $ 254,000 Sales budget (8.000 units at $32) Direct materials used 11.680 62,500 Direct labor 12.500 50,900 10,000 48,600 Manufacturing overhead applied Selling and administrative expenses 17.330 75,000 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 $ 18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $2,500 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 $ 9,010 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 $ 9,100. $9.422 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 $ 10,240 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 abovel plus other accounts payable relating to manufacturing overhead of $ 7,420. Unpaid income taxes at December 31 will be $4,750. Prepare a budgeted statement of cost of goods sold. KRAUSE INDUSTRIES Budgeted Cost of Goods Sold For the Year Ending December 31, 2020 Finished Goods Inventory, 1/1/20 26520 Cost of Good Manufactured V Direct Materials Used 62500 Direct Labor 50900 Manufacturing Overhead Applied 48800 162000 Cost of Goods Available For Sale 188520 Finished Goods Inventory, 12/31/20 45000 Cost of Goods Sold 143520 e Textbook and Media Attempts: unlimited (b) Your answer is correct. Prepare a budgeted multiple-step income statement for 2020. KRAUSE INDUSTRIES Budgeted Income Statement For the Year Ending December 21, 2020 Sales Revenue 256000 Cost of Goods Sold 143520 i Gross Pront 112480 Selling and Administrative Expenses V 75000 i Income from Operations 37480 Interest Expense 3500 Income before Income Taxes 33980 Income Tax Expense 13592 Net Income /(LOSS 2008 Prepare a retained earnings statement for 2020. (List items that increase retained earnings first.) KRAUSE INDUSTRIES Budgeted Retained Earnings Statement For the Year Ending December 31, 2020 Retained Earnings, 1/1/20 25000 Add : Net Income/(Loss) 21900 46900 Less : Dividends 8000 Retained Earnings, 12/31/20 38900