Problem 22-06A a-d (Video) (Part Level Submission)

Blossom Industries balance sheet at December 31, 2019, is presented below.

BLOSSOM INDUSTRIES Balance Sheet December 31, 2019
Assets
Current Assets
Cash					$7,500
Accounts receivable					73,500
Finished goods inventory (1,500 units)					26,190
Total current assets					107,190
Property, Plant, and Equipment
Equipment			$40,580
Less: Accumulated depreciation			10,980		29,600
Total assets					$136,790
Liabilities and Stockholders' Equity
Liabilities
Notes payable					$26,260
Accounts payable					46,550
Total liabilities					72,810
Stockholders' Equity
Common stock			$38,510
Retained earnings			25,470
Total stockholders' equity					63,980
Total liabilities and stockholders' equity					$136,790

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		14,080		62,500
Direct labor		12,500		50,900
Manufacturing overhead applied		10,000		48,600
Selling and administrative expenses		15,320		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. Blossom 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 2020, the company expects to declare and pay an $8,620 cash dividend. The companys 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 $10,290. $4,474 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Blossom expects to pay $8,260 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 $8,260. Unpaid income taxes at December 31 will be $7,770.

Assets Current Assets Cash Accounts Receivable Finished Goods Inventory Total Current Assets Property, Plant and Equipment Equipment Less Accumulated Depreciation Total Assets Liabilities and Stockholders' Equity Current Liabilities Accounts Payable Income Taxes Payable Total Current Liabilities Notes Payable Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity