BUNCOMB COMPANY Post-Closing Trial Balance December 31, 2018 Account Debit Credit Cash $ 22,000 Accounts Receivable 20,000 Merchandise Inventory 15,500 Prepaid Insurance 2,400 Equipment and Fixtures 30,000 Accumulated Depreciation $ 20,000 Accounts Payable Salaries and Commissions Payable 26,000 6,700 Common Stock 14,000 Retained Earnings 23,200 Totals $ 89,900 S 89,900 Budgeted total sales, all on account $ 121,700 Budgeted purchases of merchandise inventory, all on account Budgeted cost of goods sold Budgeted selling and administrative expenses: 61,200 60,850 Commissions expense 6,085 Salaries expense 3,000 Rent expense 4,100 Depreciation expense 900 Insurance expense 300 Budgeted cash receipts from customers Budgeted cash payments for merchandise inventory Budgeted cash payments for salaries and commissions Budgeted income tax expense 126,450 67,925 14,836 4,700

Question

Preparing a financial budget—budgeted income statement and balance sheet

Buncomb Company has the following post-closing trial balance on December 31, 2018

The Company’s accounting department has gathered the following budgeting information for the first quarter of 2019:

Additional information;

Rent and income tax expenses are paid as incurred. Insurance expense is an expiration of the prepaid amount.

Requirements

  1. Prepare a budgeted income statement for the quarter ended March 31, 2019.
  2. Prepare budgeted balance sheet as of March 31, 2019.
BUNCOMB COMPANY
Post-Closing Trial Balance
December 31, 2018
Account
Debit
Credit
Cash
$ 22,000
Accounts Receivable
20,000
Merchandise Inventory
15,500
Prepaid Insurance
2,400
Equipment and Fixtures
30,000
Accumulated Depreciation
$ 20,000
Accounts Payable
Salaries and Commissions Payable
26,000
6,700
Common Stock
14,000
Retained Earnings
23,200
Totals
$ 89,900
S 89,900

Image Transcription

BUNCOMB COMPANY Post-Closing Trial Balance December 31, 2018 Account Debit Credit Cash $ 22,000 Accounts Receivable 20,000 Merchandise Inventory 15,500 Prepaid Insurance 2,400 Equipment and Fixtures 30,000 Accumulated Depreciation $ 20,000 Accounts Payable Salaries and Commissions Payable 26,000 6,700 Common Stock 14,000 Retained Earnings 23,200 Totals $ 89,900 S 89,900

Budgeted total sales, all on account
$ 121,700
Budgeted purchases of merchandise inventory, all on account
Budgeted cost of goods sold
Budgeted selling and administrative expenses:
61,200
60,850
Commissions expense
6,085
Salaries expense
3,000
Rent expense
4,100
Depreciation expense
900
Insurance expense
300
Budgeted cash receipts from customers
Budgeted cash payments for merchandise inventory
Budgeted cash payments for salaries and commissions
Budgeted income tax expense
126,450
67,925
14,836
4,700

Image Transcription

Budgeted total sales, all on account $ 121,700 Budgeted purchases of merchandise inventory, all on account Budgeted cost of goods sold Budgeted selling and administrative expenses: 61,200 60,850 Commissions expense 6,085 Salaries expense 3,000 Rent expense 4,100 Depreciation expense 900 Insurance expense 300 Budgeted cash receipts from customers Budgeted cash payments for merchandise inventory Budgeted cash payments for salaries and commissions Budgeted income tax expense 126,450 67,925 14,836 4,700

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