Prepare the following balance sheet using the information provided.

Balance Sheet at 31st December 2020

Assets$$

Current Assets

Cash

Accounts receivable

Finished goods inventory

Raw materials inventory

Total Current Assets:

Property, Plant & equipment

Less: Accumulated depreciation

Total assets:

Liabilities and Shareholders Equity

Liabilities

Accounts payable

Bank Loan

Shareholders Equity

Common Stock

Retained Earnings

Total Shareholders Equity:

Total Liabilities and Shareholders Equity

Statement of Retained Earnings as at 31st December 2020

Opening balance

Net Income

Less Dividends

Closing balance

Recreated from information provided:

Balance Sheet at 31st December 2019

Assets$$

Current Assets

Cash

Accounts receivable

Finished goods inventory

Raw materials inventory

Total Current Assets:

Property, Plant & equipment

Less: Accumulated depreciation

Total assets:

Liabilities and Shareholders Equity

Liabilities

Accounts payable

Shareholders Equity

Common Stock

Retained Earnings

Total Shareholders Equity:

Total Liabilities and Shareholders Equity

ABC C+A5:K44ompany makes steel tool cabinets for offices. They are in the process of preparing

a Master Budget including the Operating budget, Cash Statement, Income Statement

and Balance Sheet for 2020. The yearly budget is broken into quarters. The year end is

31st December 2020. Your group has been requested to compile a master budget for the

fiscal year 2020.

Additional details:

Sales price per filing cabinet is

$1,950

There are800tool cabinets in finished goods inventory at the end of 2019 with a

value of $360,000. At the end of each quarter, ABC Company requires to have

2340

units in finished goods inventory.

Each cabinet uses195sq. ft. of steel during the manufacturing process. The cost of

steel for 2020 is estimated to be $8per sq. ft.

ABC Company currently has30,000sq. ft.of steel in the beginning inventory. At

the end of each quarter, ABC Company wants to have

156,000sq. ft.of ending

inventory.

Each cabinet requires15.6machine hours and7.8direct labour hrs to produce.

Direct Labour costs $54.6per direct labour hour.

ABCCompany allocates manufacturing overhead costs based on the estimated machine

hours. Estimated manufacturing overhead cost for 2020 are$

2,457,000and are all variable.

For each quarter, it is estimated that

40% of sales will be cash and

60

% will be credit sales. Of the credit sales, 80% pay in the quarter of the sale and 20% pay in the

following quarter. Credit sales from Q4 2019 were

$1,300,000

Direct labour costs and manufacturing overhead costs are paid for in cash in the quarter they

occurred.

Assume operating expenses occur evenly throughout the year and are all paid in cash.

For each quarter,70% of material purchases are paid for in cash in the quarter of

the purchase and30% are paid in the following quarter. Purchases of materials from

Q4 2019 were$1,500,000

ABC Company

Additional details continued:

ABC Company will pay$60,000in dividends in Q4

Currently, the cash balance in the bank is $15,000. ABC Company wants to maintain a

minimum cash balance of $10,000 in the bank for each quarter.

Budgeted sales volumes are:

Q116770Q217940Q317550Q418720

Selling and Administration expenses for the budgeted year are as follows;

Variable Cost:

Delivery costs are based on$0.3per sales unit.

Commissions are based on

0.1% of sales value.

Fixed Costs:

$

Accounting & professional services

1800

Administrative & Sales Salaries

77000

Advertising

9000

Computer costs

4200

Depreciation

35000

Office Supplies

2300

Printing

1400

Insurance

1200

Property taxes

500

Rent

20000

Utilities

3000

Total Fixed Costs

155400

ABC Company will purchase a new machine on 1/1/2020 worth $700,000 and will make two equal

payments. The first payment will be in Q1 and the second in Q3. Assume the machine was

purchased at the beginning of the year.

Taxation is30% on taxable income and paid at the end of Q 4 each year.

Balance sheet information as at 31st December 2019 is as follows;

PPE

$100,000

Accumulated Depreciation

$100,000

Common Stock$280,000

Retained Earnings

$145,000

For Cost of goods sold (COGS);

Add total costs of production + Beginning Finished goods - Ending Finished goods Inventory.

Interest of $9000on loans is paid in total at the end of the year and is a fixed cost.