The management of mecca copy, a photocopying center located on university avenue, has compiled the following data to use in preparing its budgeted balance sheet for next year: ending balances cash ? accounts receivable $ 8,800 supplies inventory $ 5,300 equipment $ 37,500 accumulated depreciation $ 15,200 accounts payable $ 2,500 common stock $ 5,000 retained earnings ? the beginning balance of retained earnings was $35,000, net income is budgeted to be $19,900, and dividends are budgeted to be $2,900. required: prepare the company’s budgeted balance sheet.

Cash 23,100

Retained earnings 52,000

Explanation:

Really easy!Retained Earnings increases by the amount of net income and decreases when dividend are paid. If we have a beginning balance of 35,000 in RE (retained earnings) then we sum the net income and subtract the dividends to get the final balance of RE:

35,000 + 19,900 - 2,900 = 52,000

in the balance sheet, at the equity section the entry of Retained earnings must be 52,000.The other accounts for equity and liabilities are Common Stock and Accounts Payable

Equity and Liabilities

Accounts Payable  plus Common Stock and Retained Earnings:

2,500 + 5,000 + 52,000 = 59,500

Equity and Liabilities 59,500According to the accounting equation, Assets equal to Equity plus Liabilities

So Assets are equal to 59,500.

We have as part of assets Cash, Accounts receivable, supplies inventory, equipment and accumulated depreciation, that instead of adding is subtracting. Everything equal to 59,500 so we write the equation and get Cash from there.

Cash+ Accounts receivable + supplies inventory + equipment - accumulated depreciation = 59,500

Cash + 8,800 + 5,300 + 37,500 - 15,200 = 59,500

Cash + 36,400 = 59,500

Cash = 59,500 - 36,400

Cash = 23,100.

So the entry for Cash in the balance sheet is 23,100Mecca Copy Balance SheetAssets Cash$23,100Accounts receivable $ 8,800Supplies inventory $ 5,300 Equipment $ 37,500 Accumulated depreciation($ 15,200)Total Assets$59,500LiabilitiesAccounts Payable$2,500Total Liabilities$2,500EquityCommon Stock$5,000Retained Earnings$52,000Total Equity$57,000Total Liabilities and Equity$59,500

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