The Following Information Is Available for Jergenson Company

question 199

Essay

The following information is available for Jergenson Company:
a.The Cash Budget for March shows a bank loan of $10,000 and an ending cash balance of $48,000.
b.The Sales Budget for March indicates sales of $120,000.Accounts receivable is expected to be 70% of March sales.
c.The Merchandise Purchases Budget indicates that $90,000 in merchandise will be purchased in March on account.Ending inventory for March is predicted to be 600 units at a cost of $35 per unit.Purchases on account are paid 100% in the month following the purchase.
d.The Budgeted Income Statement shows depreciation expense of $4,000,net income of $44,000 and $21,000 in income tax expense for the quarter ended March 31.Accrued taxes will be paid in April.
e.The Balance Sheet for February 28 shows equipment of $77,000 with accumulated depreciation of $28,000,common stock of $25,000 and retained earnings of $8,000.There are no changes budgeted in the equipment or common stock accounts for March
Prepare a budgeted balance sheet as of March 31.

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Definitions:

FICA Tax

Federal Insurance Contributions Act tax, a payroll tax deducted from employees' wages for Social Security and Medicare benefits.

Employer

An individual or business entity that hires and pays wages or salaries to one or more employees in exchange for their work.

Paychecks

Documents issued by an employer to an employee to pay for services rendered, representing salary or wages.

Withheld FICA Tax

Taxes taken out of an employee's paycheck for Social Security and Medicare.