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9.9: Budgeted Balance Sheet

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    Learning Outcomes

    • Create a budgeted balance sheet

    Ok, one more piece of our puzzle to finish up! The balance sheet gives us a snapshot in time. In this case, a snapshot in our budgeted time. There are lots of pieces of the puzzle, so let’s take a few minutes to review:

    Thumbnail for the embedded element "2200.60 Master Budget 6 Budgeted Balance Sheet"

    A YouTube element has been excluded from this version of the text. You can view it online here:

    One more reminder: \text{assets}=\text{liabilities}+\text{stockholder's equity}

    This accounting equation may come in handy as we work through this process.

    If sales, costs and expenses all follow the budget, here is what our year end balance sheet will look like!

    Hupana Running Company Budgeted Balance Sheet
    Current Assets
    Cash $112,275
    Raw Materials Inventory $1,000
    Finished Goods Inventory $3,825
    Total Current Assets $117,050
    Plant and Equipment
    Land $25,000
    Buildings and Equipment $50,000
    Accumulated Depreciation $(4,000)
    Plant and Equipment, Net $71,000
    Total Assets $188,050
    Liabilities and Owner’s Equity
    Current Liabilities
    Accounts payable $ –
    Stockholder’s Equity
    Common stock $50,000
    Retained earning $138,050
    Total stockholder’s equity $188,050
    Total liabilities and stockholder’s equity $188,050
    Note: We made some beginning balance assumptions here: the land and buildings were already there, along with the stock and a beginning retained earnings of $31,050.

    So overall, Hupana Running Company is in great shape if the budget goes as planned. But, budgets don’t always go as planned, so having a cash cushion is a great thing! They could have reduced sales, or price reductions and still be ok. They did a great job of creating a cushion, where if things happen, they will still be fine.

    Most businesses make some changes during the year to the budget. The budget is a guide, and must be considered a fluid document, that can be changed as new information or situations occur.

    CC licensed content, Original
    • Budgeted Balance Sheet. Authored by: Freedom Learning Group. Provided by: Lumen Learning. License: CC BY: Attribution
    All rights reserved content
    • 2200.60 Master Budget 6 Budgeted Balance Sheet. Authored by: Accounting Instruction, Help, & How To. Located at: License: All Rights Reserved. License Terms: Standard YouTube License

    9.9: Budgeted Balance Sheet is shared under a not declared license and was authored, remixed, and/or curated by LibreTexts.

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