Question

ABC INC, announces the following accounts and balances on 12/31/17: Cash                            $25,000 Equipment (

ABC INC, announces the following accounts and balances on 12/31/17:

Cash                            $25,000

Equipment (net)            10,000

Inventory                    75,000

Retained Earnings       20,000

Common Stock            90,000

During the first quarter [January _ March] of 2018 the business gauges they will sell 150 units of an item at a cost of $200 per unit. All units are sold on account. The business estimates the account receivable balance will be 15% of the sales revenue for the quarter. The business plans to buy 120 units of an item at a cost of $125 per unit during the quarter. They estimate the account payable balance will be 25% of the budgeted quarterly purchases at the end of the quarter. The business estimates selling & general/administrative expenses of $9,000 for the quarter ($500 of this amount is for depreciation expense).

Prepare a budgeted income statement for the first quarter of 2018 and a budgeted balance sheet as of 3/31/18.

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