The Budgeted Balance Sheet
• The budgeted balance sheet is a projection of the company's financial position at
the end of the budget period.
• This budget is developed from the budgeted balance sheet for the preceding year and
the budgets for the current year.
• udgeting is not limited to manufacturers.
• Budgets may also be used by merchandisers, service enterprises, and not-for-
• The sales budget for a merchandiser is both the starting point and the key factor in
the development of the master budget.
• The major differences between the master budgets of a merchandiser and a
manufacturer are the following:
o A merchandiser uses a merchandise purchases budget instead of a
• A merchandiser does not use the manufacturing budgets (direct materials,
direct labour, and manufacturing overhead).
• The merchandise purchases budget shows the estimated cost of goods to be
purchased to meet expected sales.
• Below is the formula for determining budgeted merchandise purchases.
• When a merchandiser is organized by department, separate budgets are prepared
for each one.
• For example, a grocery store may start by preparing sales budgets and purchases
budgets for each of