 hello in this lecture we're going to troubleshoot some problems that could happen with the master budget now of course this is a long process and if we get to the end of the budgeting process being the balance sheet and it's out of balance that could happen and the question is how do we go through there and find out what is wrong and one way we could do this is we could actually try to basically journalize and record the transactions and thereby record in the debits and credits as we go and that could help us to see where we could be out of balance so in order to do that if we wanted to take that approach we could set up basically a trial balance based on what we have here so in this problem we were given a balance sheet here we can journalize from the balance sheets and try to journalize this activity to get to the ending numbers let me try to just give an introduction to what that might look like so if i'm i'm just going to hide some cells over here i'm going to right click and hide these cells so that i can have this trial balance and i'm not going to re-input the the numbers but basically you're just going to take the balance sheets and you're going to put it into trial balance format and that means removing the subtotals and put it i'm going to put credits as negatives so that it'll balance in that way so for example i'm just going to go straight down through here cash is going to be 40 thousand counts table 342 248 raw materials 98 five and then finished goods inventory 25 three two five five four zero and then if i want to check my subtotals it adds up to 108 288 108 288 so we're on track then we're going to go to the equipment 600 thousand less accumulated depreciation that's a credit of a negative i'm going to put it in as a negative 150 thousand i'm going to have my credits be negatives and then we get to the total property plan equipment and the total assets so then i'm going to highlight these and i'm off here so what do we have one million no i'm not one million uh 256 so we're correct okay so then we're going to keep going we are on the liability so these are going to be credits so i'm going to represent it as a negative 200 uh 205 for accounts payable and then we have a negative 12 short-term liability and again if i add those two up adds up to uh 225 so that's the 225 subtotal and then we've got a long-term liability 500 thousand not going to put in the subtotal but if i added up all the liabilities not including the uh accumulated depreciation 712 5 712 5 so we're on track then the long-term no actually this one needs to be down here i'm going to add an account for income tax payable which we will need at a later time so then we have the common stock i'm going to make this blue because this is the capital account so those are in the middle so sometimes i like to just show the fact that this is the just the differing point between the balance sheet and the income statements so there's the capital retained earnings 208 788 and no dividends now we're at zeros meaning the debits minus the credits now equals zero so we are in balance at that time so then what i'll typically do is then say that we want the ending balance over here so i'm going to say that ending balance is going to equal the beginning balance plus whatever activity we will put in there we're going to journalize the activity basically journalize the budgeting act activity then i'm just going to highlight this all the way down i'm going to highlight all the way down to here and these are all the accounts i'm going to need so i'm actually going to delete some of these rows and this is all we're going to need delete shift up and note that how did these zeros get here it's just all we did was sum up i said equals the sum of everything all this all the way down because we're going to need some income statement accounts why is it stopped at the balance sheet because we're stopping at the point in time at the end of june 30th in this case and then we're going to budget forward so we don't have any income statements already closed out to the balance sheet so i'm going to add some income statement accounts because we're going to need them for the budgeting process then if i highlight this across then we have this and if you want to know why they're green i went to the home tab styles and we went to uh when they're equal i want them to be green so that means i can see that uh whether they're green or not and it'll keep us in balance so if that equals zero we're going to have a degree and if it's not zero then it's going to change and that'll give us a visual indication so then i'm going to highlight from aid m let go right click highlight from aid m let go right click and unhide oh i hid instead of unhide let's do that one more time i'm going to right click and unhide all right okay so now notice i've also added just our journal entry area this is where we're going to enter the journal entries and post them to this section and see what happens so if we just go through our some of our activity you can say well the sales happened and we had sales of this dollar amount and we know that part of those sales were on account and part of them were for cash so i'm going to go ahead and post that out so we're going to have some cash we're going to have accounts receivable that are going to go up and the other side of it's going to be sales sales is going to be in the sales i'm going to have a credit of this number now the problem told us that 70 percent of our sales are on account that's what we're budgeting to happen so i'm going to say the negative because i want to flip the sign of this number times 0.7 and that'll say this is how many how much of those sales sales we're going to have on account and then the difference between this minus this which i'm just going to say negative sum is going to be our plug that means that that much is cash so now the debits equal the credits and we can just journalize this transaction and see if it ties out to our ending balance sheet once we're done we're going to say okay cash is here and accounts receivable is here and then sales went up down here like so and that'll put us back in balance now we've recorded our sales and we can kind of check those off to our indie numbers as we go and i can kind of say over here we can say like whoa okay i've taken a look at this we've pretty much journalized the activity there so then what happened is we had the raw material i'm going to i'm going to skip down here to the raw materials is what we're going to produce and here we have the raw materials that we purchased and i'm going to make the assumption first that we purchased it all basically for cash i'm going to adjust for that later but right now because we we bought it on account but right now i'm just going to say we bought it um i'm sorry we're going to say we bought it