 Hello in this lecture we're going to look at the master budget part six budgeted balance sheet if you haven't taken a look at the other five you might want to take a look at those first because we will be using components of those in order to compile the balance sheet at the end of this we will be able to list components of the master budget and compile the budgeted balance sheet this is going to be the components here we started with this sales budget we need to do it in this order sales budget then we had the production budget and then the production budget will be used to make the direct materials budget the direct labor budget the overhead budget as well as the capital expenditures budget the selling and administrative budget then we're going to have the cash budget then we can put together the statements the balance sheet budget and the budgeted income statement as well as the cash flow we also had some other worksheets in order to calculate the income statement we wanted to calculate the cost of goods sold in order to do that we needed to have the cost of goods manufactured so that's going to be the process that we're going through in this case in this one we're going to focus in on the balance sheet putting a lot of the stuff together in terms of the balance sheet remember when we think about the budget we often think about the income statement how we're going to perform over time the balance sheet is going to be where we are at as of the end of that point in time where we're going to be standing once the budget time period is over in terms of a balance sheet perspective all right so we have done this so far we've already done the sales budget that's number one step one we did step two we used that to do the production budget then we have the raw materials budget the direct materials budget and then the factory overhead budget the selling expense budget the general and administrative expense budget we used that to create the cash budget here and then the budgeted cost of goods manufactured so that we can get the cost of goods manufactured number that we would then use to calculate the cost of goods sold number we use that to then calculate the income statement so we've done all that so far we're going to bounce back and forth to some of these items in order to use them to create the balance sheet the point we are at at the end of the time period of course so balance sheet at the end of our budgeted time period where do we stand after this time period that we are budgeting for this quarter is ended that's what we're looking at we're not the assets will be the current assets we're going to start off with cash cash will be coming from the cash budget so cash budget we have the 40 000 that's where this 40 000 is here don't confuse that with the 40 000 at the beginning of last time's balance sheet so this is the balance sheet last at the end of last period which is of course the beginning numbers for this period the reason it's the same is because remember that's our minimum balance so it happens to be that we needed to take out a loan to get to 40 000 and because that's our minimum balance so don't get confused that that's the same 40 it's not the same 40 uh this is the beginning 40 this is the ending 40 the reason they're the same is because we made it the same in order to keep our minimum balance at 40 by taking out a loan in this case the loan at the end for that 8160 all right then we got the accounts receivable we're gonna have to do a bit of a calculation to figure out what the ending balance in the accounts receivable is so what we're going to do is we're going to take the beginning receivable which is going to come from last time's uh accounts receivable so we had the balance sheet as of the end of last period which is of course the beginning of this period at 342 248 that's where we start and then we're going to add to that the credit sales so we're going to have to figure out what the credit sales are our problems going to have to give you that in real life we're going to have to of course estimate that in this case the problem said that we have 1,447,200 in sales given by the sales budget here so here's the sales budget giving us this number here and we said that 70% of that the problem said was going to be on account therefore those are sales that are going to increase accounts receivable so here's where accounts receivable started then we had the sales on account increase in the receivable and then we have the cash collections from credit sales so we had to figure that out and we've done that in the past we did that on the total cash receipts from customers calculation here and so if we add these up that's what we received in terms of cash so of course that's going to be what's reducing the accounts receivable so if we take this and make it a bit larger like this we're going to say that the 342248 plus 346080 plus 329280 is going to give us this 1,017608 and then if we do the calculation we started off with 342248 people owned us money plus 1013040 that's what increased accounts receivable those with the sales on account minus what people paid us which was 10170608 and that should give us the ending balance of 337680337680 that's our ending receivable so we got to go through a bit of a calculation to get that that's what we're going to be out here on our balance sheet there's the ending receivable next item raw materials we're going to take that from step three in our budgets which is raw materials budget and we're going to take the ending balance in terms of units here and multiply it times the 21 per unit price and that will give us our ending balance of the 84,000 in this case so remember what we're looking at is where we stand as of the end of the time period that's what the balance sheet is in terms of the budget of balance sheet so we're going to take our ending amount here that's what we're going to have on the balance sheet at the end of the time period then we've got the finished goods inventory finished goods inventory we could take from the cost of goods sold calculation where we have here and this is going to have to be something that's given in the problem it's going to have to be something that we will estimate in real life what's going to be in the ending finished goods inventory and then if we add up the total current assets then we can take out the calculator here and that would be the 40,000 plus the 337680 plus the 8400 plus the 321360 gives us the 783040 that's our total current assets then we're going to have the equipment we're going to look in there's a property plant and equipment we can get that from the prior times equipment we had 600,000 then we have to look for the stuff that was added or taken away and this problem the only thing happened was equipment that was added it was all for cash that's why i'm looking at the cash budget in order to get that if we financed it and whatnot we'd have to think about find how much equipment we had purchased whether with financed or not in this case we had the 600,000 we had one purchase through this time period for cash of the 130 that gives us the total equipment 730,000 then we have the accumulated depreciation the stuff we're going to reduce the equipment by once again we're going to take the balance sheet from the last period so last period's balance sheet had accumulated depreciation 150,000 and we have the budgeted overhead budget gave us 21,000 a month or 63,000 on the quarter so the 150,000 plus the 63,000 in accumulated depreciation gives us this 213,000 so then if we take the 730,000 minus the 213,000 we have a book value of the equipment of 517,000 then we're going to have the total assets total assets being the outer column so the outer column of current assets 78340 plus the 517 gives us the $1,300,040 then we have the liabilities in equity we're going to move on to starting with the current liabilities first one being accounts payable we're going to go through a similar calculation that we did with the receivable in order to figure out what is in there now this is going to be a bit more simplified because of the way this particular problem was set up we're basically left with in the receivable this number here the September and but let's go through the calculation a bit in the long way just so we can see how this calculation would work and how you could see it applied to a different type of setup in this setup we're saying that we're going to purchase everything on account and then pay for everything the following month so if we think about this we're going to say okay then that means that there's 200,500 that's what we started off in accounts payable that's what was in there at the end of last month that's what's in there at the beginning of this month and then we're going to say okay then we had purchases of raw materials remember the assumption is that we purchased all of it on account so we purchased everything on account in this case for the entire month we purchased 611 474 all of it on account so that would increase the accounts payable then we have to think about how much payment for raw material how much did we pay and the assumption is that we pay the month following we pay for the full previous month the month following so that means that the amount we paid in in august we paid the 200,000 five and then uh in septem sorry in july we paid the 200,000 five that we that we purchased the month before and then uh and then in august we paid the 207 and then up september we paid this 212 for the purchases that leaves us then of course with this number so if we add up the 200,000 five plus the 207 224 plus the 212 625 we've come up with the 191 i'm sorry we come up with the 623 49 and if we then say let's take out the calculator and actually do the calculation here so then if we take the 200,500 we started with plus the 611 474 minus uh what we paid 623 49 we're gonna end up with the 191 625 here and of course that is the purchases that we made in september so that's why this one happened to wind up of course the purchases that we are left in september because we're gonna pay them all off in the following month all right so if we pull that over there's the 191 625 here next we have the short term loan payable 8,160 that remember we're going to take from our cash flow statement because that loan is fluctuated it's kind of like a line of credit we needed that in order to get to our minimum balance of this 40,000 in cash and then we have the income tax payable that's going to come from the income statement so that's going to be down here on the income statement we had to calculate the income tax payable that is what's going to be owed for income taxes on the balance sheet at the end of this time period then we have the total current liabilities that's going to be of course this number plus this number plus this number will give us the total current liabilities then we have the long term note payable that doesn't change according in this particular problem that was the 500,000 at the beginning of the time frame we're paying off interest only during this time period during this quarter therefore the principal does not go down so we're still at the 500,000 and now we're going to move to the equity section where we're going to have the retained earnings so we'll do the calculation for retained earnings which will be the beginning retained earnings which we will get from the last time's balance sheet so last period balance sheet ending retained earnings for last period beginning retained earnings for this period we're going to add to that the net income which we will of course get from the income statement so there's income we're going to add that to the retained earnings then we're going to subtract that from that the dividends that we paid out now we've recorded this in the statement of cash in in the cash budget so but I won't go back there so that's where that 10,000 it's coming from a budgeted the amount that we're going to pay out and that will give us the retained earnings so we've got the 208,788 plus the income 43204 minus the 10,000 dividends give us the ending retained earnings of 241,992 and that's going to be this item here then we're going to have the total stockholders equity which will be the 335,000 plus the 241,992 gives us the 576,992 and if we then add up the total liabilities in equity here's the current liabilities plus the note plus the total equity so these three are adding up to the 576,999 I'm sorry these three adding up to the 1,300,040 and of course the total liabilities in equity will then equal the total assets and so we are in balance in our budgeted balance sheet