Krause industries

Balance Sheet december 31 2016

CURRENT ASSETS		$7,500
ACCOUNTS RECEIVABLE		73,500
FINISHED GOODS INVENTORY (1500 UNITS)		26,210
TOTAL CURRENT ASSETS		107,210
PROPERTY PLANT AND EQUIPMENT
EQUIPEMNT	$40,260
LESS: ACCUMULATED DEPRECIATION	$10,420	$29,840
TOTAL ASSESTS		$137,050
LIABILITIES & STCOKHOLDER EQUITY
LIABILITIES		$26,220
ACCOUNTS PAYABLE		45,730
TOTAL LIABILTIES		71,950
STOCKHOLDERS EQUITY
COMMON STOCK	$37,190
RETAINED EARNINGS	27,910
TOTAL STOCKHOLDERS EQUITY		65,100
TOTAL LIABILITIES & STOCKHOLDERS EQUITY		$137,050
BUDGETED DATA FOR THE YEAR 2017 INCLUDE THE FOLLOWING
2017
	QUARTER 4	TOTAL
SALES BUDGET (8,000 UNITS AT $32)	$76,800	$256,000
DIRECT MATERIALS USED	13,480	62,500
DIRECT LABOR	12,500	50,900
MANUFACTURING OVERHEAD APPLIED	10,000	50,520
SELLING & ADMINISTRATIVE EXPENSES	17,760	75,000

krause Industries balance sheet at December 31, 2016, is presented below.

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. Krause 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 an $8,460 cash dividend. The companys cash budget shows an 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 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 2017, the company expects to purchase additional equipment costing $10,340. $5,998 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 $8,450 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 $8,530. Unpaid income taxes at December 31 will be $6,680.