Problem 21-6A (Part Level Submission) Krause Industries balance sheet at December 31, 2016, is presented below. KRAUSE INDUSTRIES Balance Sheet December 31, 2016 Assets Current Assets Cash $7,500 Accounts receivable 73,500 Finished goods inventory (1,500 units) 26,320 Total current assets 107,320 Property, Plant, and Equipment Equipment $40,010 Less: Accumulated depreciation 10,200 29,810 Total assets $137,130 Liabilities and Stockholders' Equity Liabilities Notes payable $27,820 Accounts payable 45,040 Total liabilities 72,860 Stockholders' Equity Common stock $38,930 Retained earnings 25,340 Total stockholders' equity 64,270 Total liabilities and stockholders' equity $137,130 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 11,280 62,500 Direct labor 12,500 50,900 Manufacturing overhead applied 10,000 49,660 Selling and administrative expenses 15,250 75,000 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 $10,450 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 $9,380. $7,848 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 $9,450 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 $7,540. Unpaid income taxes at December 31 will be $7,700.