Budgeted Balance Sheet

06/04/2011 14:39

 

Budgeted Balance Sheet:

Definition and Explanation:

The budgeted balance sheet is developed by beginning with the current balance sheet and adjusting it for the data contained in other budgets.

Example | Sample of Budgeted Balance Sheet:

Following is the budgeted balance sheet of Hampton Freeze Inc. Some of the data on the budgeted balance sheet have been taken from the company's previous end-of-year balance sheet for 2008 which appears below the budgeted balance sheet for 2009.

Hampton Freeze Inc.
Budgeted Balance Sheet
December 31, 2009

Assets

Current assets:
Cash 1 $47,500  
Accounts receivable 2 120,000  
Raw materials inventory 3 4,500  
Finished goods inventory 4 39,000  
    -------------  
Total current assets     $211,000
Plant and equipment:
Land 5 80,000  
Building and equipment 6 830,000  
Accumulated depreciation 7 (392,000)  
    --------------  
Plant and equipment, net     $518,000
      --------------
Total assets     $729,000
      =======

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable (raw materials) 8   $27,000
Stockholders' equity:
Common stock, no par 9 $175,000  
Retained earnings 10 526,000  
    --------------  
Total stock holders' equity     701,100
      --------------
Total liabilities and stockholders equity     $729,000
      =======

 

Hampton Freeze, Inc.
Balance Sheet
December 31, 2008

Assets

Current Assets:
Cash $42,500  
Accounts receivable 90,000  
Raw materials inventory (21,000 pounds) 4,200  
Finished goods inventory (2,000 cases) 26,000  
  -------------  
Total current assets   $162,700
Plant and Equipment:
Land 80,000  
Building and equipment 700,000  
Accumulated depreciation (292,000)  
  -------------  
Plant and equipment, net   $488,000
  -------------
Total assets   $650,700

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable (raw materials)   $25,800
Stockholders' Equity:
Common stock, no par $175,000  
Retained earnings 449,900  
  -------------  
Total stock holders' equity   624,000
  -------------
Total liabilities and stockholders' equity   $650,700
    =======

Explanation of December 31, 2009, budgeted balance sheet figures:

  1. The ending cash balance, as projected by the cash budget on cash budget page.
  2. Thirty percent of fourth quarter sales, from sales budget ($400,000 × 30% = $120,000)
  3. From direct materials budget, ending raw materials inventory will be 22,500 pounds. This material costs $0.20 per pound. Therefore, the ending inventory in dollars will be 22,500 pounds × $0.20 = $4,500.
  4. From ending finished goods inventory budget.
  5. From December 2008 balance sheet (no change).
  6. The December 2008 balance sheet indicated a balance of $700,000. During 2009, $130,000 of additional equipment will be purchased (see cash budget), bringing the December 31, 2009, balance to $830,000.
  7. The December 31, 2008 balance sheet indicated a balance of $292,000. During 2009, $100,000 depreciation will be taken ($60,000 from manufacturing overhead budget, and $40,000 selling and administrative expense budget), bringing the December 2009, balance to $392,000.
  8. One half of the fourth quarter raw materials purchase, from direct materials budget.
  9. From the December 2008 balance sheet (no change).

10.

December 31, 2008, balance $449,900
  Add net income, from budgeted income statement 108,200
    -------
  558,100
  Deduct dividend paid from cash budget 32,000
    -------
  December 31, 2009, balance $526,100
    ======