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Income Statement and Balance Sheet for DFW Corporation

The following information relates to DFW Corporation:

All sales are on account and are budgeted as follows: February, $350,000; March, $360,000; and April $400,000 DFW collects 70% of it sales in the month of sale and 30% in the following month.

Cost of goods sold averages 60% of sales. Purchases total 65% of the following month's sales and are paid in the month following acquisition.

Cash operating expenses total $60,000 per month and are paid when incurred. Monthly depreciation amounts to $18,000.

Selected amounts taken from the January 31 balance sheet were: accounts receivable, $115,000, plant and equipment (net), $107,000; and retained earnings, $85,000.


A. Prepare a budgeted income statement that summarizes activity for the two
Months ended March 31, 20X1
B. Compute the amount that would appear on the March 31 balance sheet for
Accounts receivable, plant and equipment (net), and retained earnings.

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Solution Summary

This solution is provided in a separate excel file attached. It contains all related ledger accounts, workings for calculation of ending inventory and cost of goods sold and finally a budgeted Income statement and Balance sheet as of the 31st March.