Royal Bank of America has asked Maquire and Ferlow Ltd. for a budgeted balance sheet for the

year ended December 31, 2016. The following information is available:

1.

The cash budget shows an expected cash balance of $26,000 at December 31, 2016.

2.

The 2016 sales budget shows total annual sales of $500,000. All sales are made on

account and accounts receivable at December 31, 2016 are expected to be 8% of annual

sales.

3.

The merchandise purchases budget shows budgeted cost of goods sold for 2016 of

$210,000 and ending merchandise inventory of $21,000. 20% of the ending inventory is

expected to have not yet been paid at December 31, 2016.

4.

The December 31, 2015 balance sheet includes the following balances: Equipment

$127,000, Accumulated Depreciation $52,000, Common Stock $68,000, and Retained

Earnings $21,000.

5.

The budgeted income statement for 2016 includes the following: depreciation on equipment

$6,000, federal income taxes $21,000, and net income $41,800. The income taxes will not

be paid until 2017.

6.

In 2016, management does not expect to purchase additional equipment or to declare any

dividends. It does expect to pay all operating expenses, other than depreciation, in cash.

Instructions

Prepare an unclassified budgeted balance sheet at December 31, 2016.