The Duncan Company has just completed a number of budgets for the coming year. The cost of goods man

The Duncan Company has just completed a number of budgets for the coming year. The cost of goods

manufactured schedule, the proforma income statement and the balance sheet still have to be completed.

The following information is available:

Prior year Balance Sheet:




Accounts Payable


Accounts Receivable


Other Current Liabilities


Materials Inventory


Income Taxes Payable


WIP Inventory




Finished Goods Inventory


Long-Term Debt


Prepaid Expenses




Plant and Equipment


Common Stock


Accumulated Depreciation


Retained Earnings


Other Assets




Total Assets


Total Liab. & Equity





Information from recent budgets for the coming year:


1. Projected sales are $1,800,000  (12,690 units)


2. Projected direct material purchases are $500,000

3. Projected direct material usage is $495,000


4. Projected direct labor expense is $400,000


5. Projected overhead is $380,000


6. Projected selling expenses are $120,000

7. Projected administrative expenses are $300,000

8. Projected cash collections are $1,785,000

9. Projected payments for materials (accounts payable) are $520,000

10. Projected payments for other operating expenses (other current liabilities) are $1,130,000


11. Projected depreciation expense is $55,000 and is already included in mfg overhead




Additional information that is available:


1. The expected tax rate is 35%

2. The company is planning a stock issue of $25,000


3. Income taxes are paid 3 months after the year-end


4. The company anticipates purchasing a new patent for $10,000 during the year.


5. WIP inventory is expected to decrease by $2,000


6. Finished goods inventory is expected to increase by $8,000


7. Due to insurance rate increases, it is expected that prepaid expenses will increase by $3,000




Investment information:


1. A purchase of additional equipment for $75,000 is expected on January 1st.

2. The purchase will be made using $50,000 cash and long-term debt will be increased by $25,000




Long-Term Debt information:


1. All long-term debt will have an 8% annual rate.


2. A payment of $50,000 including BOTH  principle and interest will be made on December 31st.




Required: Prepare a cost of goods manufactured schedule, a proforma income statement and proforma balance sheet.


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